Eurozone retail sales were stagnant from the previous month in May, according to the latest PMI (purchasing managers' index) data from Markit. This stagnation at the aggregate level masked contrasting trends across the big-three Eurozone nations, however, with a solid drop in sales in Italy countering a notable rise in trade in Germany and a slight uptick in France. Meanwhile also Thursday, official estimates from Eurostat, the statistics office of the European Union, show that in the month of April 2014, the seasonally adjusted volume of retail trade rose by 0.4% in the Eurozone (EA18) and by 0.6% in the EU28. In March retail trade increased by 0.1% in both zones. In April 2014 compared with April 2013 the retail sales index increased by 2.4% in the Eurozone and by 3.4% in the EU28.
Monthly comparison by retail sector and by member country: The 0.4% increase in the volume of retail trade in the Eurozone in April 2014, compared with March 2014, is due to a rise of 0.4% for both “Food, drinks and tobacco” and automotive fuel, while the non-food sector fell by 0.1%. In the EU28, the 0.6% increase in retail trade is due to a rise of 1.2% for “Food, drinks and tobacco”, while the non-food sector remained unchanged and automotive fuel fell by 1.0%.
The highest increases in total
retail trade were registered in Latvia (+2.5%), the United Kingdom (+2.1%),
Estonia, France and Slovenia (all +1.4%). The highest decreases were observed in
Romania (-3.2%), Malta (-2.6%), Germany and Portugal (both -0.9%). Ireland
The highest increases in total retail trade were observed in Latvia (+10.5%), Estonia (+9.3%), the United Kingdom (+8.4%) and Lithuania (+8.0%). The only decrease was registered in Portugal (-0.4%). Ireland rise was at (+6.7%).
The Markit Eurozone Retail PMI - - which tracks month-on-month changes in the value of retail sales - - registered at 49.9 in May, broadly in line with the 50.0 mark that separates expansion from contraction and below April’s three-year high of 51.2. When measured on a year-on-year basis, Eurozone retail sales were down to the greatest extent for three months, albeit only moderately.
Commenting on the data, Phil Smith, economist at Markit which compiles the Eurozone Retail PMI survey, said: "Renewed weakness in Italy’s retail sector acted to offset higher sales in both Germany and, to a lesser extent, France. Incidentally, Italy was also the only nation where the survey showed a deterioration in business sentiment on the month. The weight of weak consumer spending in Italy and, to some degree, France is proving hard for Germany to carry, with the retail sector overall struggling to build any kind of momentum. The data thus far point to only a marginal gain in Eurozone consumer spending in Q2."
One area of real strength in the Eurozone retail sector remained Germany, where sales levels rose for the thirteenth straight month and at a solid pace (albeit one that was slightly slower than in April). France also recorded a higher level of trade although, as was the case in April, the rate of growth was only marginal. Undermining the gains seen in the big-two Eurozone economies was a solid and accelerated decrease in sales at Italian retailers, the most marked in three months.
The amount of spending by Eurozone retailers on items intended for resale fell slightly in May, reversing a marginal increase at the start of the quarter (the first since July 2011). Stocks continued to accumulate, however, growing for the sixth straight month partly as a consequence of sales being lower than targeted levels. The gap between actual sales and plans was indeed the widest since last October.
As well as trimming their spending, retailers also parted with more staff during May, extending the current sequence of decline in Eurozone retail employment to nine months. The rate of job shedding was little-changed from the modest pace recorded in the previous month. Only in Germany did retail staffing levels rise since April.
May’s survey meanwhile showed a further easing of the rate of wholesale price inflation faced by Eurozone retailers, to the slowest in more than four years. In spite of cost inflation having moderated, however, gross margins again fell sharply and to the greatest extent in four months.
Finally, Eurozone retailers generally remained optimistic about the outlook for sales* in May, with overall sentiment still slightly stronger than the survey’s long-run average despite having eased to a three-month low. Confidence ticked up slightly in both France and Germany, but weakened in Italy.
* 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. The panel includes large chain retailers as well as smaller retailers to ensure balanced representation of the true structure of the Eurozone retail sector. Similarly, the composition of the panel by classification of retailer (i.e. type of good sold) is monitored to ensure accurate representation. Markit ensures the correct structure remains in place over time and that response rates remain sufficiently high to generate reliable economic data.
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