Eurozone Retail Sales Drop 0.7% in May Amid Weak Outlook

Eurozone retail sales declined in May, reinforcing signs of economic fragility

Eurozone retail sales declined by 0.7% month-on-month in May, reinforcing concerns over economic weakness in the second quarter. This drop coincided with a 0.3% fall in services activity in April, according to Eurostat data.

Retail performance had initially been buoyed by rising wages and strong consumer spending earlier in the year, but May’s figures mark a notable reversal. While holiday timing may have partly influenced the dip, the broader trend is softening.

Despite some potential for recovery as purchasing power improves, rising savings and persistent consumer uncertainty may dampen retail momentum. Meanwhile, the services sector’s sluggish start to Q2 was largely driven by declines in ICT and real estate.

Although June’s services PMI hinted at stabilization, it still reflected stagnation. ING analysts noted that recent weak service sector data supports their view of a likely GDP contraction in Q2 — a sharp contrast to the strong first-quarter performance, underscoring continued economic fragility in the eurozone.