Euro zone retail sales rise more than expected in January

Euro zone retail sales rose more than expected in January and December sales were revised up sharply, data showed on Thursday, pointing to a pick-up of household spending.

The European Union's statistics office Eurostat said retail sales in January rose 0.4 percent month-on-month for a 2.0 percent year-on-year gain. Economists polled by Reuters had expected a 0.1 percent monthly and a 1.3 percent annual rise.

Eurostat also revised upwards data for December to a monthly increase of 0.6 percent from 0.3 percent and an annual gain of 2.1 percent from the previously reported 1.4 percent.

Retail sales are an indication of household demand, which has been one of the main drivers of the euro zone economy in 2015, although they declined on a monthly basis in September and October.

"Consumers perhaps offer the euro zone the best hope for growth at the moment - the fundamentals still look reasonable for consumer spending in the euro zone with deflation/negligible inflation boosting purchasing power and labour markets generally improved," said Howard Archer, economist at IHS Global Insight.

ING economist Teunis Brosens said that, after a run of declines in confidence and deflation surprise, there was no evidence any more of a year-end slowdown in consumption and a positive start to 2016.

However, consumer sentiment worsened in February, so it remained to be seen if spending has held up.

"At its meeting next week, the ECB will therefore not take these positive retail sales figures for granted," Brosens said, adding he expected the ECB to announce further monetary easing.