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Bert Colijn, senior economist at ING, notes that Eurozone’s retail sales declined by 0.3% month-on-month in May, casting doubt on the strength of the service sector.

Key Quotes

“These are confusing times for the eurozone. With divergences between GDP and survey data and an ECB on the brink of taking action, it is all the more important to look at hard data coming in. May’s retail sales will therefore be taken as an important indication that consumption growth has slowed significantly in the second quarter.”

“As the industrial slump in the eurozone continues, it’s the service sector that’s keeping GDP from contracting at the moment.”

“With so much dovishness in recent speeches, it is clear that the ECB is ready to act if necessary. With 2Q weakness in the retail sector, the importance of industrial performance only rises. Next week will see May’s industrial production figures for the eurozone. If very disappointing, that could sway the central bank to go early.”