Retail sales in the euro zone rose 0.2% in August, recovering from flat July, but factory orders in Germany fell 5.8%, the sharpest drop since January. The euro fell below $1.10 on the news.
advertisementEurozone retail sales showed a modest recovery in August following a slump in July, according to the latest data from Eurostat.
Retail trade in the euro area increased by 0.2% in August compared to July, and in the European Union by 0.3%. This figure improved from the flat reading in the euro area last month, and rose by 0.1% for the EU as a whole.
On an annual basis, retail sales in the euro area increased by 0.8%, while the EU saw a much stronger annual increase of 1%.
The monthly data was in line with economists' expectations, but the euro zone's annual data reflected some weakness in consumption trends across the currency area, lowering expectations for a 1% rise.
The data showed mixed results across different categories. Food, beverage and tobacco sales increased by 0.2%, and non-food sales excluding motor fuel increased by 0.3%.
In particular, sales of motor fuels in specialty stores increased by 1.1%.
Looking at individual Member States, Luxembourg recorded the highest monthly growth, with retail volumes increasing by 5.3%. Cyprus and Romania followed, rising by 2.2% and 1.6% respectively.
In contrast, Denmark experienced the sharpest decline with retail trade falling by 1.5%, while Slovakia, Bulgaria and Croatia also recorded negative growth, all contracting by around 0.7%.
German manufacturing orders plummet
While there was some positive news in the retail sector, the outlook for manufacturing in Germany, Europe's largest economy, paints a much bleaker picture.
German manufacturing orders plunged 5.8% in August from the previous month, according to data from the Federal Statistical Office. This steep drop was significantly worse than the expected 2% decline and was the worst monthly decline since January 2024.
The decline in factory orders was mainly due to a decline in large orders placed in July in areas such as the construction of aircraft, ships, trains and military vehicles. As these large orders subsided, manufacturing struggled to maintain momentum.
Breaking down the data further, orders for capital goods fell by 8.6%, while orders for intermediate goods fell by 2.2%.
The consumer goods sector also faced a slump, with orders decreasing by 0.9%.
Domestic and eurozone orders fared particularly poorly, falling by 10.9% and 10.5%, respectively. However, orders from outside the euro area were a positive sign, increasing by 3.4%.
Market reaction: euro under pressure, stocks falling
Poor performance in Germany's factory sector weighed on the euro, which continued to fall against the US dollar.
advertisementIn early trading Monday, the euro fell 0.1% to below $1.10. This marks the single currency's seventh consecutive session of losses, making it the longest losing streak since September 2023.
Also contributing to the euro's woes were comments from European Central Bank chief economist Philip Lane, who said inflation in the euro zone was cooling faster than expected, raising market expectations for future rate cuts. pointed out.
Stocks across Europe also suffered a slump from the start of the week.
The Euro STOXX 50 index fell 0.3%, Milan's FTSE Mib index underperformed, falling 0.5%, and Germany's DAX fell 0.4%. In contrast, Madrid's IBEX 35 bucked this trend and rose by 0.3%.
In the corporate sector, French luxury goods giants such as Kering and LVMH rose to the top of the Euro STOXX 50 index, with optimism about improving export prospects to Asia following China's latest stimulus package last weekend, with their respective It increased by 2.4% and 1.1%.
advertisementOn the downside, the pharmaceutical sector lagged, with Sanofi dropping 2.2% on concerns that talc-based products could impact bids in the consumer healthcare sector.
Bayer and semiconductor company ASML Holding also fell, dropping 1.8% and 2.5%, respectively.
