March retail PMI (purchasing managers' index) data from Markit showed a second straight monthly fall
in sales across the Eurozone retail sector. However, the rate of decline was
slower than in February and only marginal. Country level PMIs converged towards
the 50.0 mark that separates expansion from contraction, with growth easing to a
marginal pace in Germany and Italy recording its slowest decrease in sales for
more than three years. Sales in France were unchanged from February, ending a
six-month run of decline.
The Markit Eurozone Retail PMI -- which tracks month-on-month changes in the
value of retail sales - - registered at 49.2 in March, up from February’s mark of
48.5. This was the sixth sub-50 reading in the past seven months, but one that
was indicative of only a marginal rate of decline. Year-on-year, sales fell at
the slowest rate since September 2011.
Commenting on the data, Phil Smith, economist at Markit and author of the
Eurozone Retail PMI, said: "The retail sector remains an area of relative weakness in the
economy, lagging behind the manufacturing and service sectors which have long
been in growth phases. That said, the retail data suggest that the worst may
have passed, with trade stabilising in France in line with positive trends
elsewhere in the economy and Italian companies recording a much slower rate of
decline. However, growth of any real kind in coming months will undoubtedly
require a re-acceleration in Germany."
Germany saw only a fractional
rise in retail sales in March, the slowest in its current 11-month sequence of
growth. Trade in France meanwhile stabilised, having fallen
continuously since last September. The contraction in sales at the Eurozone
level therefore reflected a further decrease in Italy.
That said, Italian firms recorded their slowest fall in sales in the current
downturn which began in March 2011.
Retailers in the euro area generally maintained a preference for lower employment, with
staffing levels falling at a modest pace that was little-changed from that
recorded in the previous survey period. Job losses in both France and Italy
countered a further (albeit slower) rise in employment at retailers operating in
reduced to a level more consistent with lower demand, extending the current
sequence of contraction to 32 months. Furthermore, the degree to which buying
levels decreased was the most marked since last November.
Stock levels meanwhile rose
slightly, the fourth consecutive month of accumulation.
A brighter outlook for sales was signalled by the March data, with
retailers the most optimistic about their future performance* in three years.
Sentiment was the strongest since early 2011 in each of the big three.
Finally, March’s survey showed a reduction in the rate of purchase price inflation faced by
Eurozone retailers, to the slowest in
eight months. The slowdown was broad based by country. By sub-sector at the
Eurozone level, the strongest rise in average purchasing costs was recorded by
companies specialising in pharmaceuticals.
* 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.