Estonian retail sales grew 2% y/y in constant prices in October, according to data released by Statistics Estonia on December 1. 

The reading shows the sector improving – albeit very slightly – on the feeble growth rate of 1% y/y seen throughout most of the year. Still, the October gain manages to keep retail sales on an expansion track that has run since mid-2013. In monthly terms, retail sales fell 6%, compared to a contraction of 2% m/m in August.

However weak, retail sales growth in Estonia is fuelled by the tight labour market, as wages grew 7.4% y/y in the third quarter. With industrial output also growing steadily – at 6.2% y/y in October – the momentum appears to be there for GDP to continue robust growth in the coming quarters.

GDP expanded 4.2% y/y in the third quarter, data showed on November 30. The Estonian economy is expected to grow 4.2% in 2017, according to the most recent prediction by Swedbank. The outlook from the European Commission puts growth at 4.4%.

The annual growth in retail sales came on the back of an 8% expansion in sales of manufactured goods, the same rate as in the annual growth in September. Within the segment, sales of textiles jumped 12% y/y, with sales of household goods and appliances, hardware and building materials growing at the same y/y rate as well.

Food sales fell 4% y/y in October on the back fast-growing prices, Statistics Estonia noted. The drop in food sales deepened in comparison to a decline of 1% y/y the previous month. Sales of automotive fuel gained 1% y/y, after dipping 9% y/y the previous month.