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3 Jun 2015
Improvement in labour market continue to fuel household consumption - ING
FXStreet (Barcelona) - Reviewing the Eurozone retail sales data release, Peter Vanden Houte of ING, explains that the 0.7%mom gain suggests that the improvement in labour market is boosting household consumption.
Key Quotes
“Eurozone retail sales recovered in April, printing a 0.7% month-on-month growth after the 0.8% downward correction in March. The improvement on the labour market (the Eurozone unemployment rate fell in April to 11.1% from 11.3% in March), the low energy prices and the buoyant financial markets are continuing to fuel household consumption.”
“That said, it is probably still too early to bank on a consumption boom. Indeed, some of the positive impact on real disposable income is already petering out with crude oil prices having risen by 50% since the beginning of this year. It was therefore not surprising that the assessment of the financial situation in the consumer survey deteriorated in May.”
“Too be sure, consumption is still expected to be one of the growth drivers this year on the back of employment growth and some decline in the savings ratio. But more than a gradual recovery looks improbable for the time being.”
“We therefore believe that (later today) the ECB will continue to stress the fact that it will keep its QE in place until September 2016, to avoid a premature tightening of monetary conditions at a time that the recovery remains vulnerable.”
Key Quotes
“Eurozone retail sales recovered in April, printing a 0.7% month-on-month growth after the 0.8% downward correction in March. The improvement on the labour market (the Eurozone unemployment rate fell in April to 11.1% from 11.3% in March), the low energy prices and the buoyant financial markets are continuing to fuel household consumption.”
“That said, it is probably still too early to bank on a consumption boom. Indeed, some of the positive impact on real disposable income is already petering out with crude oil prices having risen by 50% since the beginning of this year. It was therefore not surprising that the assessment of the financial situation in the consumer survey deteriorated in May.”
“Too be sure, consumption is still expected to be one of the growth drivers this year on the back of employment growth and some decline in the savings ratio. But more than a gradual recovery looks improbable for the time being.”
“We therefore believe that (later today) the ECB will continue to stress the fact that it will keep its QE in place until September 2016, to avoid a premature tightening of monetary conditions at a time that the recovery remains vulnerable.”