Eurozone retail sales for March see biggest surge in 18 months

Shoppers were out in force in March
Shoppers were out in force in March Copyright Alastair Grant/Copyright 2022 The AP. All rights reserved
Copyright Alastair Grant/Copyright 2022 The AP. All rights reserved
By Piero Cingari
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Eurozone retail sales in March surged, marking the highest increase since September 2022. European stocks reacted positively, buoyed by better-than-expected corporate earnings and hopes of an ECB interest rate cut.


Eurozone retail sales witnessed their sharpest monthly increase since September 2022, displaying promising signs of economic recovery in household consumption.

Data released by Eurostat on Tuesday revealed retail sales in the euro area advanced by 0.8% month-on-month in March. The rebound came after an upwardly revised decline of 0.3% in February and exceeded market expectations of a 0.6% increase.

Annually, sales grew by 0.7%, reversing a 0.5% contraction in February and marking the first positive annual rate since September 2022, the highest since May 2022.

In the euro area, March's data showed a 1.2% rise in sales of food, drinks, and tobacco, while non-food products (excluding motor fuel) remained stable. Sales of such  fuel in specialised stores saw a 2.0% increase. Across the broader European Union, food, drinks, and tobacco sales rose by 0.8%, non-food products (except motor fuel) by 0.5%, and motor fuel in specialised stores by 1.5%.

Performances by member states contrast starkly with the UK

Among the member states with available data, Poland, Cyprus, and Hungary posted the most significant monthly increases in total retail trade volume at 7.3%, 4.8%, and 2.0% respectively. In contrast, Sweden, Malta, and Austria saw the largest declines at 1.8%, 1.0%, and 0.8% respectively.

This robust performance within the euro area starkly contrasts with the situation in the United Kingdom, where retail sales in April 2024 plummeted by 4.4% year-on-year, defying expectations for a 1.6% growth. The downturn was attributed to poor weather and the early timing of Easter. Helen Dickinson, chief executive at the British Retail Consortium, noted that dismal weather and disappointing sales contributed to a bleak start to spring, particularly affecting sectors like clothing and footwear, especially outdoor sportswear, as well as garden furniture.

European stocks supported by earnings, rate-cut expectations

European stock markets reacted positively to the retail sales data, with the Euro Stoxx 50 index climbing 0.6% during Tuesday morning's trading, aiming for its third consecutive session of gains. Market sentiment remains buoyed by better-than-expected corporate earnings and anticipated rate cuts by the European Central Bank.

Noteworthy movements in the stock market included Italy's second-largest bank, UniCredit, which surged 3.1% to a 13-year high after it reported a substantial increase in Q1 net income and upgraded its financial outlook for the year. UBS shares jumped more than 8% following the announcement of pre-tax profits of $2.37 billion (€2.2 billion), significantly surpassing the $1.04 billion (€970 million) expected. In Germany, Infineon's shares increased by more than 6%, despite the chipmaker revising its revenue outlook downward for the second time for fiscal 2024.

Zalando's shares experienced a roughly 5% uplift after the company reported a return to revenue growth and provided an optimistic outlook, buoyed by the upcoming summer Olympic games. Meanwhile, Deutsche Post shares edged up by 1% following results that largely met expectations. In contrast, Siemens Healthineers saw its shares drop nearly 4% due to a significant revenue and earnings shortfall, exacerbated by a marked slowdown in China.

Investors and market observers are now keenly anticipating the release of the Monetary Policy Meeting Accounts from Frankfurt this Friday, which could further solidify expectations of rate cuts in June.

Money markets are currently pricing in an 80 basis points reduction in interest rates by the end of the year, suggesting that three cuts of 25 basis points each are fully factored in.

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