EU Economy
Eurozone retail PMI surges to highest since January 2011
By Michael Hennigan, editor and founder of Finfacts
Aug 10, 2015 - 8:26 AM

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EU & Euro Area retail sales 2006-2015 from Eurostat

Growth of retail sales in the Euro Area accelerated at the start of the third quarter, reflecting upturns in each of the bloc’s big-three nations, latest Eurozone Retail PMI (purchasing managers' index) data showed.

However, last week Eurostat, the EU statistics office, reported that in June 2015 compared with May 2015, the seasonally adjusted volume of retail trade fell by 0.6% in the Euro Area (EA19) and by 0.5% in the EU28. In May retail trade increased by 0.1% and 0.2% respectively. In June 2015 compared with June 2014 the retail sales index increased by 1.2% in the Euro Area and by 2.0% in the EU28 (see chart above).

The increase in July sales according to the PMI survey (panel of retail companies in France, Germany and Italy in these three countries account for approximately 62% of total Eurozone retail sales by value) was the greatest since January 2011, and the second fastest since early-2007.

The headline Markit Eurozone Retail PMI — which tracks month-on-month changes in like-for-like retail sales across the bloc’s biggest three economies combined — climbed from June’s 50.4 to 54.2 in July, and has now signalled growth in sales for three consecutive months. Sales were also up in comparison to July 2014, with the annual rate of growth the fastest recorded since May 2008.

Phil Smith, economist at Markit which compiles the Eurozone Retail PMI survey, said: “July’s retail PMI showed sales growth accelerating sharply as levels of trade rose across Germany, France and Italy. Each made positive strides since June though it was Germany that remained by far the brightest performer, recording a sharp increase in sales that was the fastest since late-2006. The especially good weather had a positive influence on these results, leading consumers to splurge on food and drink in particular, from which we may see some payback in the following month’s data as households reassess their finances.”

Germany led retail sales growth in July, recording its sharpest monthly increase in over eight-and-a half years. French retailers also saw a notable upturn in performance, registering a solid rise in sales in July —
the fastest since October 2011 — on the back of 13 consecutive months of contraction. Italy’s marginal rise in sales was nevertheless its only since early-2011.

Despite seeing sales increase retailers still underperformed relative to their targets in July, though the gap between actual sales and plans was the least marked since April 2014. Sentiment towards the month-ahead outlook generally waned, except in Germany where it strengthened and was highly positive. July meanwhile saw retail employment growth accelerate to the fastest in four-and-a-half years, although remaining modest.

A slight rise in employment in Italy — the first since 2007 — was offset by staff trimming in France, leaving Germany as the main driver of job creation, as has been the case throughout the current eight-month sequence of growth.

Retailers in the Eurozone’s largest economy were also the mainstays in an upturn in spending on goods for resale, the first at the Eurozone level since February. Both French and Italian retailers made only fractional contributions to the overall rise in buying levels. Inventories meanwhile returned to growth in July, having fallen during June for the first time in eight months. The rate of wholesale price inflation faced by Eurozone retailers eased slightly further from May’s recent high, though still remained solid. Gross margins meanwhile decreased but at the slowest rate since April 2007, reflective of the improved performance on the sales front during the month.


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