Retail sales in the Eurozone fell in July as France
and Italy both saw accelerated contractions in trade, the latest PMI (purchasing
managers' index) figures from Markit
showed. The fall in retail sales in the euro area was the most marked since May
2013 despite further, albeit slower, growth recorded in the currency bloc’s
largest economy, Germany.
At 47.6, down from a neutral reading of 50.0
in June, the headline Markit Eurozone Retail PMI - - which tracks month-on-month
changes in like-for-like retail sales - - pointed to a solid decrease in
Eurozone retail sales at the start of the third quarter. July’s survey also
showed that sales were sharply down on the year, with the annual rate of decline
the fastest in 14 months.
Commenting on the data, Phil
Smith, economist at Markit which compiles the Eurozone Retail PMI
survey, said: "The Eurozone retail
sector started the second half of the year on a weaker footing. The fragility of
consumer spending was exposed by the PMI, particularly in France and Italy where
the data showed sharper downturns in sales. Even in Germany, the one area of
relative strength, there was an appreciable slowdown from June’s recent peak.
Retailers underperformed relative to their targets to the greatest extent since
March 2013, leading to further accumulations of unsold stock and the prospect of
greater discounting ahead.”
Underlying July’s decrease in Eurozone retail sales were faster contractions
in trade in both Italy and France. The former posted its most
marked monthly decrease in like-for-like sales since February, having seen the
pace of decline accelerate every month since May. France’s decrease in sales was
the sharpest since May 2013 and the second in as many months. German retail sales on the other hand
continued to grow, albeit at a much reduced rate compared with June’s near
three-and-a-half year high.
Despite this renewed weakness, employment among Eurozone retailers rose fractionally (on average) for
the second month in a row. Indeed, the rate of job creation at German retailers
was little-changed from the solid pace seen in June, which was sufficient to
offset further modest job losses in both France and Italy.
The level of
spending among Eurozone retailers on items for resale dipped for the second
time in three months in July, having been stable during June. Stock levels
rose nevertheless, the accumulation
a reflection of sales having been lower than expected. Moreover, the shortfall
in sales was the most marked since March 2013.
Cost pressures faced by retailers remained mild in the
context of historical data, with
wholesale price inflation running
below the long-run series average having dipped in July. Details suggested that
falling buying levels among French and Italian retailers weighed on the pricing
power of their suppliers.
July’s survey meanwhile highlighted a pessimistic outlook*
among retailers regarding their future performance, with sentiment the most
negative for a year.
are asked whether they expect next month’s sales to be higher, lower or the same
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.