Euro zone retail sales weaken in July, casting doubt on consumption outlook

Euro zone retail sales fell more than expected in July, raising concerns over whether resilient household spending can continue to offset the drag on growth from U.S. tariffs and broader economic uncertainty.

According to Eurostat data released Thursday, retail sales in the 20-country bloc dropped 0.5% month-on-month, compared with expectations for a smaller 0.2% decline. On an annual basis, sales rose 2.2%, undershooting forecasts of a 2.4% increase.

The euro zone economy showed surprising strength in the first half of the year, supported by robust household consumption. But the latest figures add to doubts about the sustainability of that trend, especially as consumer sentiment comes under pressure from escalating trade tensions and global economic headwinds.