European retail sales slump

According to the European Union statistics office, retail sales in the euro zone have fallen by 1.6 percent in September compared to last year with a 0.2 percent drop from August.

The current financial crisis has meant that consumer confidence is at a low ebb and with the services industry also shrinking at a record pace this month, it is no wonder that European consumer sentiment is at a 15-year low.

With overriding pressure it seems as though the European Central Bank will go ahead by cutting interest rates for the second time in November.

Spending remains weak as a result of consumer confidence taking a battering due to the deterioration of the labour market.

The forecast had been for a 2.2 percent decline in September retail sales, although a decline of 0.4 percent was expected last month, so in that way some positives can be taken from the latest results.

The state of consumer spending cannot be easily predicted, although the European Commission has revealed that because economic growth is likely to stagnate next year, hopes for domestic spending are not high.

The latest data does indicate that the weakness in consumer confidence will remain, as household confidence for October has fallen to its lowest levels since 1990.

It has had a deep impact on both France and Germany with the German HDE retailers association revealing that their earnings had fallen by 1 percent in real terms from last year.

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