Retail Sales Down in the EU, Some Countries Looking Positive

Retail sales across the EU fell in May, with a 0.5% decrease from April's figures recorded by Eurostat. May 2009 retail sales were over 3% lower than those recorded in May last year.

Retail sales had recently been heading upward in the EU, and in the UK, but in the latter, the Office for National Statistics had found that indicators were that the upward trend would end this month. It seems that this was true of the EU also.

When retail sales were rising people were pointing to the record low interest rates as being behind it, surprising that it should start falling now when interest rates are still low. It is also surprising because industrial producer prices are falling, which should mean prices are also coming down at a retail level.

The likely explanation for the fall is the fact that unemployment is still rising across the EU.

Some countries did oversee rising retail sales in May, on a monthly basis; retail sales in Latvia were up 0.8% in May compared to April, Belgum by 0.6% and Germany and Romania by 0.4%. The biggest fallers on the month were Lithuania and Austria at -1.8%, Slovakia at -1.7%, Bulgaria, Denmark and Sweden lost 1.3% in retail sales in May.

The only two countries to see retail sales higher in May this year than last year were Sweden at 2.2% and Poland at 0.4%. The biggest losers on an annual basis were Latvia at -26.4%, Lithuania at -19.9% and Slovenia at 13.4%.

The retail sales volume is one of the most accurate economic indicators, if people are spending the economy will start to recover. If I was going to invest in an EU property right now I would go for a Latvia property, because retail sales have dropped a great deal, so the monthly rise signals a bottom. A recovering economy is a recovering housing market, so I would buy on a short-term strategy hoping to sell for a profit in 3-5 years.