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    Retail Sales in the US and the Eurozone reached parity

    The US retail sales were released on Tuesday, July 14. The report turned out disastrous. Instead of expected growth by 0.2% in June, retail sales fell by 0.3% on a monthly basis. Year over year growth slowed from 2.3% to 1.4% y/y.

    Comparing this report with a similar report from the Euro area, published earlier this month (although it covered May, not June), we can note some interesting moments. In May, annual growth rate of retail trade in the United States and the euro area were virtually identical: 2.3% – in the United States, 2.4% – in the Eurozone. We can say that America and Europe met at the 2% mark. The only difference is that both economies went completely different ways towards this mark…

    It can be clearly seen on the Charts.

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    In 2011, retail sales growth in the United States (see Chart 1) was very active, and at some point it even exceeded 8%. At the same time in the euro area (Chart 2), the figure was not even low, it was negative.

    And then … In the US, 2011 was the peak. By the end of the year retail sales slowed to 6%. In the next three years, decline continued – and continues to this day. On the chart we see the American indicator keeping its negative trend, which took it below 1,5% mark. Last year’s attempt to break this trend failed – the index returned below the trend line. I warned about the possibility of such scenario in the early spring.

    In the Eurozone, the situation was the opposite. Reaching the bottom in 2012 at the level of -3.5% y/y, retail sales began to recover. As a result, there emerged still ongoing trend – but, unlike America, it’s not negative, but positive. It reached its peak in December 2014 – 3.2% y/y. The indicator rebounded up in April, as I predicted two months ago, after March decline below 2% y/y, and then retraced above the two-percent mark again.

    Findings

    In recent years, retail sales growth in the euro area has been accelerating, while in the United States – slowing. As a result, the regions met at the same growth rate. But not for long. Retail trade volumes in the E-19 have all chances to hold above 2%, while in the United States they are likely to keep below this mark. If we take the first five months of 2015, in three out of five cases the Eurozone was ahead of the USA.

    Assessing the US statistics on retail trade, we have to admit that in the second quarter this sector was hampering the country’s path towards 3% GDP growth: average retail sales growth in the period from April to June, didn’t even make it to the two-percent level. A very sad fact for the economy, which depends on consumer spending by 70%! ..

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!

    The US retail sales were released on Tuesday, July 14. The report turned out disastrous. Instead of expected growth by 0.2% in June, retail sales fell by 0.3% on a monthly basis. Year over year growth slowed from 2.3% to 1.4% y/y.

    Comparing this report with a similar report from the Euro area, published earlier this month (although it covered May, not June), we can note some interesting moments. In May, annual growth rate of retail trade in the United States and the euro area were virtually identical: 2.3% – in the United States, 2.4% – in the Eurozone. We can say that America and Europe met at the 2% mark. The only difference is that both economies went completely different ways towards this mark…

    It can be clearly seen on the Charts.

    11111111111111

    222222222222222222

    In 2011, retail sales growth in the United States (see Chart 1) was very active, and at some point it even exceeded 8%. At the same time in the euro area (Chart 2), the figure was not even low, it was negative.

    And then … In the US, 2011 was the peak. By the end of the year retail sales slowed to 6%. In the next three years, decline continued – and continues to this day. On the chart we see the American indicator keeping its negative trend, which took it below 1,5% mark. Last year’s attempt to break this trend failed – the index returned below the trend line. I warned about the possibility of such scenario in the early spring.

    In the Eurozone, the situation was the opposite. Reaching the bottom in 2012 at the level of -3.5% y/y, retail sales began to recover. As a result, there emerged still ongoing trend – but, unlike America, it’s not negative, but positive. It reached its peak in December 2014 – 3.2% y/y. The indicator rebounded up in April, as I predicted two months ago, after March decline below 2% y/y, and then retraced above the two-percent mark again.

    Findings

    In recent years, retail sales growth in the euro area has been accelerating, while in the United States – slowing. As a result, the regions met at the same growth rate. But not for long. Retail trade volumes in the E-19 have all chances to hold above 2%, while in the United States they are likely to keep below this mark. If we take the first five months of 2015, in three out of five cases the Eurozone was ahead of the USA.

    Assessing the US statistics on retail trade, we have to admit that in the second quarter this sector was hampering the country’s path towards 3% GDP growth: average retail sales growth in the period from April to June, didn’t even make it to the two-percent level. A very sad fact for the economy, which depends on consumer spending by 70%! ..

     

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!


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