Eurozone's retail sales increased more than expected in August on a rebound in non-food product turnover, the latest figures from Eurostat revealed Thursday.
Retail sales increased 0.7 percent month-on-month in August compared with forecast for a 0.2 percent growth. Moreover, the rate exceeded July's 0.5 percent rise.
Sales of food, drinks and tobacco slipped 0.4 percent in August from a month earlier. On the other hand, retail trade in non-food products, except automotive fuel, grew 0.6 percent, reversing July's 0.1 percent drop.
Year-on-year, total retail sales decreased 0.3 percent in August, sharper than the forecast for a 1.5 percent fall. This followed a 0.7 percent drop in July.
In EU28, retail sales increased 0.4 percent month-on-month in August and was up 0.3 percent on a year-on-year basis. Sales were up in fourteen states on a monthly basis, while it fell in six and remained stable in Denmark.
The recent firming in retail sales volumes suggests that improving consumer confidence and the help to purchasing power coming from low inflation across the Eurozone may be feeding through to lift consumer spending, noted Howard Archer, chief European economist at IHS Global Insight.
But Archer said the suspicion remains that consumers will likely remain generally cautious in their spending in the near term at least, thereby limiting the upside for personal expenditure.
The final Purchasing Managers' survey released earlier in the day showed recovery gathering pace in the euro area.
The composite output index that reflects performance in both manufacturing and services sectors, rose to a 27-month high of 52.2 in September, up from 51.5 in August and above the earlier flash estimate of 52.1.
However, Chris Williamson, chief economist at Markit said the region is by no means out of the woods yet.
"Growth remains only modest - the Eurozone PMI is consistent with GDP rising by just 0.2 percent on the third quarter, and the political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed," said Williamson.
