Capital Economics: Eurozone retail and consumer spending outlook remains bleak

The 0.4% rise in retail sales in the euro zone in September is unlikely to continue, with a bleak outlook for the sector and broader consumer spending, said Jack Allen-Reynolds, senior European economist at Capital Economics. He said retailers had become very pessimistic and their sales expectations were lower than they were during the 2008-2009 financial crisis. He also said consumer confidence had also collapsed, suggesting overall household consumption had fallen sharply despite retailers’ still very high price expectations. Falling real incomes and bottoming out consumer confidence point to a sharp drop in household spending in the euro area over the winter.