EUROZONE DATA: March Retail Sales Broadly Flat, Non-Food Continues To Carry Y/Y
Eurozone (real) retail sales were overall broadly unchanged in March, at -0.1% M/M (+0.1% M/M cons; +0.2% February, revised from +0.3%).
- Across sectors, auto fuel was the only positive M/M print, at +0.4% M/M; both "non-food products except automotive fuel" and the food/drinks/tobacco category printed -0.1% M/M.
- On a longer-term Y/Y comparison, non-food sales (excl. fuel) continue to be the largest upside contributor. The total Y/Y was softer than in February at +1.5% in March vs +1.9% prior, revised from +2.3%.
- Consumer confidence gives a rather weak outlook for retail sales in the Eurozone: "Scoring at -16.0 points, consumer confidence moved further away from its long-term average, to its lowest level in 18 months", the European Commission commented on the latest respective release.
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EUROZONE DATA: EZ Retail Sales Index Slightly Higher Than Expected But M/M Miss
Eurozone retail trade volumes in February were two-tenths softer than consensus in M/M terms at 0.3% (vs 0.5% consensus), though January was revised up to flat from -0.3%. Overall these revisions saw the February 2025 index level at 101.7 (versus an unrevised 101.1 in January which was revised up to 101.4) so retail trade volumes were overall a little higher than imputed from both the M/M and Y/Y consensus data.
- These revisions saw Y/Y volume growth higher than expected at 2.3% Y/Y (vs 1.9% consensus), and above January's upwardly revised value of 1.8% from 1.5%.
- The monthly increase (albeit softer than expected) was driven by an increase in all sub components - though 'Food, drinks, and tobacco' sales rose at a slower pace than in January, increasing 0.3% M/M (after 0.5% in January, revised a tenth lower from 0.6%).
- Non-food products (ex-fuel) sales volume rose 0.3% M/M. This more than reversed January's decline of 0.2% M/M, which was a notable revision higher from -0.7% M/M.
- Automotive fuel sales edged up 0.2% M/M, after a flat reading in January (revised up from -0.3% M/M).
- Retail Confidence according to the European Commission weakened to -6.8 in March from -5.1 in February - the lowest since October 2024.
- The ECB staff forecast private consumption to increase 0.3% Q/Q in Q1-25. This data (including the revisions) probably makes that look a bit more achievable (albeit we still need a decent March).
EQUITIES: EU Bank put spread
SX7E (20th June) 145/137.5ps, bought for 2.5 in 12k.
GERMANY: Merz Facing Pressure On Economy & Immigration In Coalition Talks
Reuters reporting comments from chancellor-in-waiting Friedrich Merz regarding the situation in financial markets, calls the situation "dramatic" and it "threatens to get worse, [it is] therefore more urgent than ever to restore international competitiveness...competitiveness must be at the centre of coalition talks." Talks between Merz's centre-right Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU), and the centre-left Social Democrats (SPD) on forming a governing coalition continue.
- The current economic and financial market instability is adding to pressure on all parties to reach a swift agreement that will see a new gov't come to power able to implement policy to ameliorate the impact (the current caretaker gov't of Chancellor Olaf Scholz is more limited in its political room for manoeuvre).
- Merz is not only facing pressure as a result of economic instability, but also political concerns within the CDU. Recent opinion polling has shown the far-right Alternative for Germany (AfD) gaining support, with the latest INSA poll showing the AfD level with the Union parties on 24%. This marks the first time the AfD has ever (jointly) topped a nationwide opinion poll. As INSA notes, this represents a "loss of support that has never been seen before in the period between the Bundestag elections and the formation of a government".
- This has seen pressure on Merz to hold firm in coalition talks with regards to not only economic policy but ensuring a hard line on immigration. The 'final round' of negotiations is set to get underway today.
