Real retail sales decelerated from 6.7% to 3.6% year-on-year in September, well below the market consensus (6.2%).
The slowdown was largely related to cars sales which decreased by 4.3% YoY (against +11 increase in August). High sales volumes in July and August were likely the effect of a promotional campaign prior to the introduction of a new emissions testing procedure (known as WLTP). According to ACEA car registration data, a similar trend was visible among all major countries in the European Union. Car sales should return to positive territory in the coming months.
Overall sales of durable goods (radio & television equipment and household appliances) surprised negatively as well. Sales in this category decelerated from 9.1% to 2.8% YoY. The September reading was suppressed by negative statistical effects. Still, even after corrections, sales of those goods should remain on a downward trajectory, reflecting the stagnation of wage growth and worsening consumer sentiment.
Today’s reading suggests a slightly lower contribution of private consumption to overall GDP growth in 3Q. Still, we expect a headline GDP figure of close to 5% YoY.