Eurozone retail sales rise, jobless steady

Retail sales in the eurozone rose slightly in January but were lower on an annual basis as unemployment remained high, confirming the fragile state of economic growth in the 12-nation bloc, data showed on Friday. The European Union statistics office said retail sales rose by 0.3 percent in January from December but were 0.6 percent below the level of January 2004. Unemployment in the eurozone remained steady at 8.8 percent in January from December, with 12.7 million people out of work.
The chronic inability of the eurozone to create new jobs is restraining consumer spending, posing fresh questions over growth prospects in 2005 following a weak end to 2004.
"High unemployment remains a persistent serious problem for the Eurozone, substantially limiting the upside for consumer confidence and spending," said Howard Archer of Global Insight.
Officials had long pinned their hopes for growth in 2005 on stronger consumer spending to make up for weaker demand for eurozone exports due to the strong euro and slower global growth.
The main reason for the drop in annual retail sales in January was a 0.4 percent drop in the sales of food, drinks and tobacco. Sales in both Germany and France - the two largest eurozone countries - contracted along with sales in Belgium and Luxembourg from January 2004.
On a monthly basis, sales of food, drinks and tobacco rose 0.1 percent in January, with sales in Germany up 2.1 percent and by 0.3 percent in France.
Eurostat also revised down the volume of retail sales in December to be unchanged from November, compared with an original estimate of a 0.2 percent rise.
Compared with December 2003, retail sales in December 2004 were revised to show a small rise of 0.3 percent compared with the 0.5 percent rise originally reported.
The jobless rate in the 12-nation single currency area has been stuck around the current level since March 2003 but some economists had expected the jobless number to rise to reflect changes in unemployment benefit legislation in Germany.
Eurostat revised down the December unemployment rate to 8.8 percent from a previous estimate of 8.9 percent. Economists had expected an unemployment rate of 8.9 percent.