European shoppers tighten their purse strings in September, with German retail sales falling 2 percent

Eurozone retail sales volumes fell 0.7 percent in September compared with August, Eurostat figures show. Analysts had expected a drop of 0.1 percent, ActionForex reported. August was revised up to growth of 0.4 percent. Year on year, sales were still 0.4 percent higher, after 1.3 percent in August. Across the EU as a whole, the decline was 0.6 percent.

The drop came mainly from non-food excluding fuel, which fell 1.2 percent, Business AM wrote. Food, drink and tobacco were down 0.3 percent, while sales at the pump rose 1 percent. Germany fared worst at minus 2 percent, followed by the Netherlands (minus 0.7 percent), France (minus 0.6) and Spain (minus 0.4). Italy was broadly stable.

On the other hand, German industry produced 0.7 percent more in September than a month earlier, while economists had expected no change, Business AM reported, citing the German statistics office Destatis. Car production jumped 17.1 percent, while machinery fell 6.5 percent. Over the third quarter as a whole, industrial output did decline by 0.4 percent. ING economist Carsten Brzeski continues to point to high interest rates and energy costs as a risk.