Euro zone retail sales much stronger than expected in August

Thu Oct 3, 2013 5:03am EDT

* Aug sales up 0.7 pct m/m and down 0.3 y/y

* Fuels and non-food products behind m/m acceleration

* Spain and Portugal shine among euro members

BRUSSELS, Oct 3 (Reuters) - Retail sales in the euro zone rose much more than expected in August, helped by demand for fuel, food, clothes and computers, and were revised up for July as well, in a fresh sign that households could help sustain the bloc's nascent recovery.

The volume of retail trade in the 17-nation bloc jumped 0.7 percent on the month, following a revised 0.5 percent increase in July, the EU's statistics office Eurostat said on Thursday.

Economists polled by Reuters expected a 0.2 percent rise in August and the previously reported July rise was 0.1 percent.

Domestic demand in the euro zone is stifled by the bloc's longest recession since the creation of the euro in 1999. It is also dented by record high unemployment and uncertainty over when the economy will pick up.

Weak consumer spending is a concern for the European Central Bank, which kept its main interest rate at a record low of 0.50 percent on Wednesday, adding it was closely monitoring risks surrounding the recovery started in the second quarter.

The monthly rise in August, the peak of the holiday season, was driven by a 0.9 percent jump in sales of car fuels and a 0.6 rise in non-food products, while sales of food, drinks and tobacco fell by 0.4 percent after a 1.2 increase in July.

In Spain, where unemployment remains at record high above 25 percent and the government is implementing structural reforms, retail sales accelerated by 3.8 percent in August against July, the strongest rise in a year.

Portugal, heading for the next year's exit from an economic adjustment programme signed with international lenders in return for financial aid, saw retail sales surging by 4.8 percent month-on-month, the strongest acceleration since January 2009.

The year-on-year reading showed a much smaller-than-expected 0.3 percent drop for August, following an also downwardly revised 0.7 percent fall in July. Economists polled by Reuters saw a 1.5 percent decline.

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