April saw a rise in the level of retail sales in the Eurozone, according to the latest PMI (purchasing managers' index) data from Markit. Although only modest, growth in sales was the fastest in three years and underpinned by gains in both Germany and France. Italy meanwhile posted only a marginal reduction in trade on the month, the rate of decline in the Eurozone’s third-largest economy having eased markedly since March.
At 51.2, up from 49.2 in March, the Markit Eurozone Retail PMI – which tracks month-on-month changes in the value of retail sales – indicated a rise in actual like-for-like sales for the first time in three months. Moreover, the increase was the most marked since April 2011. Trade was also up compared with the situation one year ago, with the annual rate of growth similarly at a 36-month high.
Commenting on the data, Phil Smith, economist at Markit which compiles the Eurozone Retail PMI survey, said: "Only German retailers reported growth of any notable kind in April, though the headline PMI numbers for France and Italy, at the very least, moved in the right direction. The drag on the bloc’s overall performance from Italy’s downturn in household spending has now lessened, owing in part to a revival in consumer confidence and stability in its unemployment rate. That said, the length and depth of the contraction in Italy was such that there is a lot of ground to be made up."
The uptick in the headline PMI reflected improved trends across each of the big-three Eurozone economies monitored by the survey. Leading the expansion was Germany, where retail sales rose solidly and to the greatest extent in three months. French retailers recorded a return to growth after stagnation in March and a run of six straight months of contraction prior to that, albeit the increase in the latest survey period was only marginal. In Italy, sales fell only marginally and at the slowest rate in the current 38-month sequence of decline.
Markit said that the level of spending among Eurozone retailers on goods intended for resale rose in line with the upturn in sales in April. The increase in purchasing activity was fractional, but nevertheless contributed to a fifth consecutive monthly rise in stocks, and one that was the sharpest since February 2012. Lower-than-expected sales during the month was another factor behind the accumulation of stock.
Employment levels continued to fall, however, down for the eighth straight month amid job shedding at Italian and French retailers alike. The degree to which employment decreased at the aggregate level was the most marked in 2014 so far, though still only modest.
April’s survey showed that retailers generally remained upbeat about the month-ahead outlook* for sales, despite sentiment having weakened since the preceding survey period. In each of the big-three, confidence was above the respective survey’s long-run average but lower than in March.
Finally, April saw a further reduction in the rate of wholesale price inflation faced by Eurozone retailers, to the slowest in three-and-a-half years. Cost pressures were weakest overall in Italy; and strongest in Germany.
* Companies are asked whether they expect next month’s sales to be higher, lower or the same as plans.
For the Retail PMI, Markit has recruited a representative panel of retail companies in France, Germany and Italy. Together, these three countries account for approximately 62% of total Eurozone retail sales by value.
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