Eurozone retail trade shows tepid growth after prior drop in October

The final quarter of last year was disappointing for retailers in the eurozone, with little reprieve forecasted for 2025.

The seasonally adjusted volume of retail trade increased by 0.1% in the euro area in November 2024, compared to the prior month.

That’s according to data released by Eurostat on Thursday – and follows readings of -0.3 in October and 0.5% in September.

In the European Union, meanwhile, the volume of retail trade increased by 0.2%, following readings of -0.1% October and 0.4% in September.

“Total sales remain well below their November 2021 peak and their pre-pandemic trend,” said Andrew Kenningham, chief Europe economist at Capital Economics – signalling that “recovery following the pandemic has been disappointing”.

Partially due to Covid-related supply chain disruptions and the war in Ukraine, the eurozone saw an inflationary peak in 2022.

While price rises are now cooling and the ECB is on a rate-cutting path, retail trade in the eurozone is still suffering from tighter fiscal conditions.

Retail trade robust in Cyprus and Bulgaria

Contributing to November’s 0.1% uptick was an increase in automotive fuel trade (0.8%) and a rise in food, drink, and tobacco sales (0.1%).

The trade of non-food products, excluding automotive fuel, declined by 0.6% month-to-month.

Comparing member states that have available data, the highest monthly increases in the total retail trade volume were recorded in Cyprus (2.3%), Bulgaria (1.3%), Denmark and Latvia (both 1.1%).

The largest decreases were seen in Belgium (-2.4%), Germany and Spain (both -0.6%), as well as in Poland and Finland (both -0.2%).

France recorded a monthly rise of 0.3%.

Predictions for the year ahead

Looking ahead to 2025, Andrew Kenningham noted that “rising real incomes, modest employment growth and falling interest rates should support consumption”.

He noted, however, that a modest recovery is more likely than a strong rebound as real incomes are set to grow at a slower pace next year.

Due to real income growth seen in 2024, Peter Vanden Houte, chief economist at ING Belgium, told Euronews that November’s “weaker retail sales are more due to less willingness to spend than to a lack of purchasing power”.

“One of the drivers of weaker consumer confidence is the expectation of higher unemployment. That probably triggered an increase in precautionary savings,” he explained.

A meaningful acceleration in retail trade before the second half of 2025 is improbable, Vanden Houte added.

“For the coming months there is still a lot of uncertainty related to the new US president, but also the rather difficult political situation in France and Germany,” he said.

“On top of that the fear of higher unemployment is not going to disappear in the short run, with many European companies, especially in manufacturing, announcing restructurings and layoffs.”