Euro Area Retail Sales Struggled to Advance, Germany's Industrial Output and Exports Lacked Momentum

Bridgette Randall
09 Jan, 2025
London

European markets traded down in thin volume as investors debated future rate paths amid rising bond yields. 

Benchmark indexes in Frankfurt, Paris, Milan, and London struggled to stay above the flatline as investors debated the outlook of exports from the currency union in the future. 

The European Union goods exported to the U.S. are likely to face higher tariffs, which could lower volume in the months ahead, adding to a list of worries in the region. 

Bond yields in the eurozone advanced to fifteen-year highs, matching the rates seen seven months ago, following the surge in yield in the U.S. Treasury notes. 

 

Germany's Trade Surplus Edged Lower In November 

Germany's exports and imports declined in November, resulting in a decline in an annual trade surplus, according to the latest data released by the Federal Statistical Office, or Destatis. 

Exports fell 3.5% from a year ago to €127.3 billion, and imports declined 2.9% to €107.9 billion, resulting in a decline in trade surplus of 6.6% to €19.7 billion from €21.1 billion a year ago. 

On a monthly basis, exports increased for the first time in three months, and most German goods reached the U.S., China, and the U.K. 

Exports to the U.S. increased 14.5% from the previous month to €14.0 billion, to China decreased by 4.2% to €6.6 billion, and to the UK rose by 8.6% to €7.2 billion. 

Most imports to Germany arrived from China, the U.S., and the U.K., as the largest economy in the eurozone imported fewer commodities and intermediate goods. 

Imports from China declined 3.1% from the previous month to €13.4 billion, from the U.S. fell by 3.7% to €7.2 billion, and from the U.K. fell by 4.7% to €2.8 billion. 

Calendar and seasonally adjusted goods worth €67.8 billion were exported to the member states of the European Union, and €55.0 billion were imported from the region. 

 

Germany's Industrial Output Lacked Momentum in November 

Germany's industrial output advanced from the previous month but fell from the previous year in November, according to a report released by Destatis. 

Calendar adjusted Industrial output, after adjusting for inflation, which includes manufacturing, energy, and construction, advanced 1.5% from October but fell 2.8% from a year ago. 

Industrial production, which excludes energy and construction, increased 1% from the previous month but fell 3.2% from a year ago. 

Energy production advanced 1.5% from the previous month but declined 0.4% from a year ago. 

 

Eurozone Retail Sales Struggled to Advance in November 

Retail sales in the Euro Area rose less than expected in November amid elevated interest rates and high cost of living. 

Retail sales volume rose 0.1% on a monthly basis in November after a 0.3% decline in the previous month, Eurostat reported Thursday. 

Automotive fuel sales rose 0.8% compared to a decline of 0.4%; food, drinks, and tobacco sales edged up 0.1% from 0.2%, but non-food sales edged down 0.6%, matching the rate in the previous month, respectively. 

Among the largest economies in the region, retail sales increased 0.3% in France but fell 0.6% in Germany and Spain. 

The annual increase in retail sales slowed to 1.2% from 2.1% in October. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 20,294.40; the CAC-40 index rose by 0.2% to 7,464.24; and the FTSE 100 index inched higher by 0.6% to 8,304.35. 

The yield on 10-year German bonds edged higher to 2.52%, French bonds rose to 3.38%, the UK gilts increased to 4.83%, and Italian bonds rose to 3.70%.

The euro edged lower to $1.03; the British pound inched lower to $1.228; and the U.S. dollar eased to 91.18 Swiss cents.

Brent crude decreased $0.08 to $76.07 a barrel, and the Dutch TTF natural gas fell by €0.36 to €44.73 per MWh. 

 

Europe Stock Movers

Tesco PLC declined 1.8% to 363.56 pence despite the grocery retailer reporting strong sales growth in the holiday period. 

Marks & Spencer Group Plc plunged 7.4% to 363.56 pence after the retailer reported higher-than-expected holiday period sales, but the company's warnings about costs and headwinds in the months ahead dragged the stock down. 

Group sales in the quarter ending on December 28 increased 5.6% to £4.06 billion, driven by an 8.7% increase in food sales to £2.6 billion and a 1% rise in apparel, home, and beauty sales to £1.3 billion. 

UK and Ireland sales advanced 5.9% to £3.9 billion, and international sales dropped 2.8% to £178 million. 

B&M Value Retail SA dropped 10.5% to 307.38 pence after the discount retailer lowered its annual earnings outlook. 

The variety store tightened its adjusted operating earnings outlook range to between £620 million and £650 million from the previous range between £620 million and £660 million. 

Sales in the fiscal third quarter from a year ago increased 2.8% to £1.4 billion in the U.K. and 12.5% to £164 million in France.