With global trade headwinds intensifying and many governments still reluctant to turn on the spending taps (for now), the burden of growth remains with the consumer. In the eurozone, consumer conditions appear relatively mixed. There is a divergence between soft and hard data with consumer confidence waning and retail sales growth accelerating. Consumer confidence is surging in France and credit growth in Germany accelerating, which suggests that overall the eurozone is muddling along. With our regional LEI picking up, we certainly would not overegg a bearish consumer story for the bloc. Sentiment is weakening but retail sales have remained solid (top-left chart).

In the UK retail sales have been falling, but leading indicators are showing a more constructive, contrarian outcome over the next 6-12 months. The top-right chart shows UK growth expectations point to a rise in retail-sales growth later next year, while the stabilisation in mortgage approvals points to a steadying in retail sales over the next 6 months (bottom-left chart). Two caveats are of course Brexit – uncertainty is likely to linger even if the Conservative party win a majority at the election on December 12 – and the UK’s household debt-load, which remains quite high (last chart).

(Click on image to enlarge)

Source: Bloomberg, Macrobond, Variant Perception