Italian Retail Sales Further Contract
There is no sign of a consumer led recovery in Italy as the monthly Retail Sales figures once again disappoint. The month on month Retail Sales data for March (seasonally adjusted) show a contraction in this sector of -0.2% compared to a flat reading of 0.0% in February. Year on year the figure (non seasonally adjusted) is now reading at -3.5% compared to a prior number of -1.0%.
Also out of Italy this morning are updates to wage growth. The April figure for Wage Inflation is reading 1.2% growth year on year compared to the previous print of 1.4%. Month on month this number has shown no change and is still at the 0.0% experienced in March.
The struggling Italian Economy is looking forward to some welcome assistance from the European Central Bank (ECB) when it meet’s to discuss monetary policy the week after next. The country will no doubt benefit from the increased monetary activity that the will be brought about by the Bank’s expected cut to the European benchmark Refinance Rate.
The ECB has already done a favor for the Italian debt management agency that has been in a position to refinance some maturing bonds over the past couple of months at record low rates. This is thanks to the ECB’s toying with the introduction of quantitative easing that has created an abundance of demand for sovereign bonds from all Eurozone nations.
Although Germany appears to have stopped any proposed quantitative easing program in it’s tracks the low yield environment has already been taken advantage of by Italy and others looking to bring down the service cost of national debt. It is still unclear as to whether quantitative easing will be required or whether it will indeed be possible, this uncertainty is keeping yields attractively low for the time being.
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