Eurozone Retail Sales Drop – Will The ECB Act?

In a moment of disappointing disclosure, Eurostat has reported that retail sales figures in the Eurozone were much lower than had originally been expected for December, with overall numbers down 1.6 percent month-on-month. This reduction negate the .9 percent growth experienced during the month of November, and, when combined with the fact that analysts had previously only expected a .7 percent reduction, proves particularly devastating. Eurostat stated that trade in food products, beverages and tobacco, as well as non-food industries were all experiencing reduced sales. Adding further gloom to this prediction is Eurostat’s report that average retail trade in 2013 fell .9 percent in the euro area and .2 percent in the EU when compared to 2012 data.

These revelations will obviously spark increased inquiry into the tactics and strategies the European Central Bank will employ in order to ensure that the recent spark-of-life seen in the Eurozone economic recovery is not snuffed out. Many analysts are predicting that the ECB will take additional steps to promote growth and help the EU continue its tentative steps back into prosperity. In contrast to this news, the Eurozone Final Services Business Activity Index rose .6 percent when compared to last month. Although this fragment of optimism may not be enough to allay all fears, it provides proof that a recovery is indeed a tangible possibility.

The economic recovery in the Eurozone has experienced its fair share of frustrations and hangups throughout the last year. While many analysts remain confident that marked recovery in 2014 is a definite possibility, these current numbers remain a telling indication of just how much ground must be gained before substantive changes can begin to be observed across the EU. Were the ECB to step in and bolster the recovery, analysts must then question whether or not growth becomes a “false positive,” an indication of larger oversight as opposed to genuine development and prosperity.

The ECB has made clear that intervention in situations such as these is completely within the realm of possibility, largely mirroring the sentiments of the Federal Reserve in the United States. Although the US recovery is proceeding at a faster pace than that of the EU, the real test of the effectiveness of these policies can only be season when they are terminated, allowing the economy to adjust and calibrate itself as necessary. When this will happen in either region of the world, however, remains to be seen.