Euro Zone Retail Sales - Economic Data Preview

Euro Zone [B]Retail Sales[/B] are expected to decline -2.2% in the year to June, a modest improvement from the previous month’s -3.3% contraction. However, the reading still clearly falls along the down trend that has guided receipts lower since December 2006. Further, a downside surprise is not out of the question considering the unexpectedly dismal German retail sales result for the same period that was revealed earlier this week. Germany is the largest economy in the Euro Zone and lackluster activity there may well drag down region-wide performance. Evaluating the longer-term outlook, any sustained return to growth in retail spending is sure to be marginal at best with the unemployment rate set to hit 9% for the first time in 5 years in 2009 and surpass 10% in 2010 according to European Commission estimates.