The recent pick up in consumer spending in the euro area, as the latest retail sales data showed, has likely contributed to a second successive quarter of moderate GDP growth, IHS Global Insight Chief UK and European Economist Howard Archer said.
According to Archer, improving consumer confidence and the help to purchasing power coming from low inflation are adding to hopes that the bloc can gradually develop recovery over the coming months.
The economist, however, cautioned that consumers will likely remain generally cautious in their spending in the near term at least as the economic fundamentals remain challenging in most countries. The high unemployment level is unlikely to come down markedly anytime soon, and purchasing power is generally limited by muted wage growth and tight fiscal policy.
Latest data from statistical office Eurostat showed that the volume of retail sales in the euro area increased 0.7 percent month-on-month in August, after gaining 0.5 percent in July and 0.8 percent in June.
The improvement in retail activity was supported by a 3.8 percent sequential growth in sales in Spain and a 4.8 percent growth in Portugal. Retail trade grew 0.5 percent in Germany and 0.2 percent in France. Meanwhile, the Netherlands recorded a 0.2 percent rise in sales.
Underscoring the positive retail outcome, recent data showed that consumer spending in the euro area rebounded in the second quarter, with a 0.2 percent sequential increase, as the currency bloc exited its long-drawn recession.
Separate data showed that consumer confidence in the region climbed to a 26-month high in September as inflation slipped to a 43-month low of 1.1 percent. Adding to the upbeat sentiment, the labor market has been showing increasing signs of overall stabilization, the economist said.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.