January 2014 Eurozone retail PMI (purchasing managers' index) data from Markit showed the first rise in sales for five months. And although
only slight, the increase was the fastest since April 2011. Germany was the
driver of growth, posting its most marked improvement in trade since August.
France’s drag on the currency union’s overall performance meanwhile diminished
as sales there fell at a much slower pace than in December, whereas Italy saw
another solid decrease.
The Markit Eurozone Retail PMI - - which tracks
month-on-month changes in the value of retail sales - - registered at a 33-month
high of 50.5 in January. Although indicative of only marginal growth, this
latest index reading was nevertheless a marked improvement from 47.7 in
December. Sales were still notably lower compared with the situation one year
Commenting on the data, Phil Smith, economist at Markit
and author of the Eurozone Retail PMI, said:
"January’s rise in sales is of course good news, but
being only the second in the past 27 months means it’s coming off of a very low
base. Furthermore, growth was confined to just Germany, with retailers in France
and Italy still contending with low consumer confidence and squeezed household
incomes. Other indicators in the survey gave mixed signals, with job shedding
easing to only a marginal pace but buying levels falling slightly faster."
Eurozone retail PMI data are based on national data for the three largest
Eurozone economies. Germany recorded a solid and accelerated increase in
sales at the start of the year, the fastest since August. France
meanwhile posted a fifth straight monthly decrease in retail trade, though the
rate of decline eased sharply since December to only a marginal pace, and one
that was the slowest in this sequence. Italy remained the main area of
weakness, with retail revenues there falling at a solid rate that was
little-changed from the preceding survey period.
Employment at retailers in the euro area decreased again, but the net
rate of job losses was the least marked in the current five-month sequence. This
reflected slower falls in staffing levels in both Italy and France. German
retailers continued to add to their payroll numbers, though job creation eased
to a four-month low.
Stocks of goods for resale at Eurozone retailers rose to the greatest
extent in more than a year-and-a-half in January. With spending on resale
items having fallen on the month,
data suggested that this was in part due to sales being lower-than-expected.
Indeed, retailers confirmed that they had generally underperformed relative to
January’s survey showed a fractional rise in
purchase price inflation in the
Eurozone retail sector, which in turn acted to further squeeze gross margins.
German retailers again faced the strongest cost pressures, as has been the case
in each of the past three months. At the aggregate level, retailers specialising
in pharmaceuticals recorded the steepest rise in wholesale prices.
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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