Madrid, Oct 28 - Spanish retail sales in September fell at the slowest rate on an annual, calendar-adjusted basis since April 2008, data showed on Wednesday, as confidence seeped back to the high street.
Spanish retail sales fell 3.4 percent year-on-year in calendar-adjusted terms compared with a 4.0 percent year-on-year fall in August and a record 9.1 percent drop in February.
"The fall in consumption is softening, much in line with what we're seeing in the economy as a whole," said economist at M&G Valores Nicolas Lopez.
Spanish gross domestic product in the second quarter fell 1.1 percent from a quarter earlier after a 1.6 percent quarterly fall in the January to March period.
The government has said third quarter GDP will show a significant improvement on previous quarters. The statistics institute is due to report preliminary third quarter GDP Nov. 12.
The state has spent an extra 27 billion euros ($40.06 billion) on infrastructure spending and tax breaks in the first nine months of the year to prop up the economy which has been badly hit by a burst property bubble and collapsed consumer spending.
"The same questions exist (over retail sales) as whether this is an effect of the stimulus and whether it's sustainable and will continue," Lopez said.
HOME IMPROVEMENT
The property market slump and credit crunch has kept consumers from spending on home improvement, the retail figures showed, with spending on larger household items down 13.4 percent.
"Sales reflect a moderation in the fall of spending on food, but the acquisition of goods for the home remains low which is linked to the weakness of the construction sector," said Xavier Segura, economist at Caixa Catalyuna.
The monthly retail figures do not reflect the seasonal effects on spending, such as children returning to school after the summer vacations and winter or summer sales, leading some economists to warn against reading too much in to the data.
"This data is not seasonally adjusted, only calendar adjusted, so it doesn't really say much about overall performance and isn't a good indicator of consumer behaviour or the economy," said economist at Unicredit Tullia Bucco.
Once seasonal factors are removed from the equation, retail sales showed a 0.8 percent year-on-year fall in September after various months of growth, economist from Citi Giada Giani said.
"From our own, seasonally-adjusted figures we saw a slight drop in September, but that comes after three months of growth," said Giani.
"September was something of a payback for the summer growth, but we expect the mildly positive trend to continue for the next few months."