Decline in Eurozone Retail Sales Eases in September
The Eurozone retail sector remained in contraction in September, according to PMI data from Markit.
Sales fell on a month-on-month basis for the eleventh successive month, although the pace of decline eased to the slowest since June.
The Eurozone Retail PMI is an indicator of changes in the value of sales at retailers. The PMI is adjusted for seasonal factors, and any figure greater than 50.0 signals growth compared with one month earlier.
The PMI rose from 44.4 in August to 47.1 in September. That was the highest since June and indicative of a slower fall in sales, although the current 11-month sequence of overall contraction is still the second-longest in the survey history.
The average reading for Q3 of 46.0 was better than Q2’s 44.3, but was still the second-lowest in twoand-a-half years.
Eurozone retail PMI figures are based on responses from the three largest euro area economies. The overall moderation in the pace of decline across the Eurozone retail sector reflected softer falls in both Italy and France. Sales fell in Italy at the slowest pace in a year, but still at a stronger rate than that registered in France.
Germany remained the best overall performer, registering only a marginal drop in sales since August.
Retail sales in the Eurozone continued to fall sharply on an annual basis in September. This mainly reflected another rapid contraction in Italy. That said, the overall rate of decline was the slowest since March, reflecting a stronger increase in Germany and much slower fall in France.
There remained marked differences by nation on the employment front in September. German retailers expanded headcounts for the twentyeighth month running, albeit at the weakest rate of 2012 so far. Retail employment in France fell for the sixth month running, but at only a marginal rate.
Meanwhile, Italian retailers continued to shed staff, continuing the trend shown since January 2008.
Cost pressures at Eurozone retailers continued to grow in September, albeit at a slightly weaker rate.
Purchase price inflation eased from August’s fourmonth high, but remained marked overall. Sector data signalled that the strongest cost pressures were in food & drink, followed by clothing & footwear.
Retailers’ margins remained under severe downward pressure in September, despite the slowing fall in sales. The rate of decline in gross margins was sharp, albeit less marked than the average for 2012 to date.
National trends reflected those for sales. The value of new purchases made by Eurozone retailers fell for the fourteenth successive month in September. The rate of decline was the weakest since March but stronger than the fall in sales, resulting in a drop in retailers’ warehouse stocks.
Commenting on the retail PMI data, Trevor Balchin, senior economist at Markit and author of the Eurozone Retail PMI, said: “September represented an improvement on August for the Eurozone’s retailers, but the sector remains firmly in contraction. The PMI average for the three months to September is broadly similar to
that seen over the first half of 2012, suggesting that consumer spending will fall for a fourth successive
quarter in Q3.
“The German consumer continues to prop up the overall region, but even here retail sales are stagnating, posting a slight fall in September for only the second time in the past two years. The downturn in French retail sales eased sharply, but the wider economy looks set to deteriorate. Italy remains by far the weakest performer among the big three, although at least the rate of contraction has moved away from the record levels seen at the start of the year.”