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Eurozone Retail Sales Fall; Unemployment Rate Remains Stable

eurozone 112819 04mar21 lt

Eurozone retail sales declined more than expected in January as strict restrictions to contain the spread of the Covid-19 dampened demand for non-food products, data from Eurostat showed on Thursday.

Another official report showed that the jobless rate in the currency bloc remained unchanged in January.

Retail sales volume decreased 5.9 percent on month, in contrast to a 1.8 percent rise in December. Economists had forecast sales to drop moderately by 1.1 percent.

The rough start to the first quarter for retail sales confirms the view of another quarter of contracting GDP, Bert Colijn, an ING economist said. The economist expects the first quarter to see negative GDP growth again thanks to lockdown measures being in place for longer than in the fourth quarter of 2020.

Sales of food, drinks and tobacco gained 1.1 percent, while non-food product sales were down 12 percent. Automotive fuel in specialized stores fell 1.1 percent.

Year-on-year, retail sales plunged 6.4 percent, reversing December's 0.9 percent increase. Economists had forecast sales to drop 1.2 percent.

The EU27 retail sales dropped 5.1 percent on month and decreased 5.4 percent annually in January.

The euro area unemployment rate held steady at 8.1 percent and up from 7.4 percent in the same period last year.

The number of people out of work increased by 8,000 from December. Compared to last year, unemployment rose by 1.010 million.

The youth unemployment rate came in at 17.1 percent, down from 17.2 percent in the previous month.

Colijn, an ING economist said that unemployment still has the potential to rise over the course of 2021 despite an upcoming economic recovery.

With productivity still very weak, thanks to short-time work schemes, and bankruptcies expected to increase once government support wanes, subdued increases in unemployment remain on the cards, the economist added.

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