INSTANT VIEW 4-Czech June retail sales fall 4.9 pct y/y

                                
 PRAGUE, Aug 13 (Reuters) - Czech retail sales fell 4.9
percent year-on-year in June, a bigger fall than analysts
forecast, and after a 7.5 percent drop in May, data showed on
Thursday.
                                
 Analysts said the data indicated that what started as a
foreign-demand led contraction had filtered into the real
domestic economy as households suffered from rising unemployment
and stagnant real wages.
                                
 They said the numbers appeared to support the central bank's
decision to cut the main repo interest rate to an all time low
of 1.25 percent on Aug. 6. 
                                
 But they added that signs of economic improvement in the
euro zone, where Germany and France both showed positive growth
in the second quarter, meant that it was possible the recession
would ease later this year.
                                
 The crown currency was little changed following the data,
and was trading at 25.75 per euro.
                                
 
****************************************************************
KEY POINTS:
(change in percent)        June       May      June forecast
RETAIL SALES (y/y)         -4.9      -7.5       -3.8
 
(Click on [ID:nPRA004703] for full table of June retail sales)

- The headline, unadjusted figure includes car sales and
repairs, fuel sales and spending on a variety of consumer goods,
including foodstuffs.
- Seasonally-adjusted retail sales fell by a real 1.1 percent
month-on-month, while dropping 5.8 percent year-on-year in June.
- Car and maintenance sales fell a real 14 percent year-on-year.
                                
 
                                
 COMMENT:
                                
 JAN VEJMELEK, ECONOMIST, KOMERCNI BANKA
                                
 "The figures are a bit weak and were lower than market
expectations. It is a disappointment for financial markets."
                                
 "Future development may be similar because we do no expect
any recovery before the end of the year. Maybe we will see
positive figures in November or December. The figures show that
households are saving their money rather than spending it."
                                
 
                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "As expected the recession has moved from foreign demand to
domestic demand. Households are suffering from rising
unemployment and stagnant real wages, thus the outcome is
falling retail sales."
                                
 "This is something that confirms the recent steps of the
central bank to cut interest rates."
                                
 "However, we can see more and more positive news abroad so
it is only a question of time before the recession can recede
completely from the Czech economy."
                                
 
                                
 VOJTECH BENDA, SENIOR ECONOMIST, ING
                                
 "The month-on-month decline of retail sales comfirmed
domestic consumer spending still represents an importatnt risk
for economic performance in coming quarters." 
                                
 "On one hand the significant slowdown of headline inflation
has been offsetting, to some extent, a moderation of nominal
wage growth, which should be rather positive for consumer
spending. 
                                
 "On the other hand the ongoing declines of employment, as
well as lingering negative consumer sentiment, both affect
consumer spending in the opposite direction. The pace of private
consumption could tilt to negative territory in the coming
quarters, curbing the recovery of GDP growth." 

 BACKGROUND:
- July consumer inflation                          [ID:nL797796]
                                
                                                [ID:nA194335]
- June industrial output figures                   [ID:nLV31146]
                                
                                [ID:nLB566860] [ID:nLU703374]
- Report on last Czech c.bank rate decision.......[ID:nL6146715]
                                
 [ID:nL655323] [ID:nPRG001524] [ID:nL6221606] [ID:nPRA004692]

LINKS:
- For further details on June retail sales and past data,
Reuters 3000 Xtra users can click on the Czech Statistical
Bureau's website:
                                
 http://www.czso.cz/eng/csu.nsf/kalendar/2004-slu

- For LIVE Czech economic data releases, click on       <ECONCZ>
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- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH]
- For Czech money markets data click on                <CZKVIEW>
- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

 (Writing by Jason Hovet; Editing by Michael Winfrey)