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Eurozone Retail Sales Crash!

  • Written by Syndicated Publisher 2 Comments2 Comments Comments
    May 31, 2012

    Retail sales in France, Italy, and the Eurozone as a whole hit the skids according to Markit. Retail sales in Germany were positive, but barely.

    Steepest Decline in French History

    Further sharp fall in French retail sales during May

    Key points:
    • Month-on-month decline in sales matches April’s survey-record
    • Steepest year-on-year decline in series history
    • Purchase price inflation eases to near-stagnation

    Sales fell on an annual basis at the steepest pace recorded since the inception of the survey in January 2004. Margins continued to be squeezed amid an intense competitive environment, despite purchase price inflation easing to near-stagnation.

    The headline Retail PMI® registered 41.4 in May, matching April’s survey-record low. French retailers indicated that actual sales came in well below previously set targets during May. The degree of undershoot was the greatest since February 2010.

    Record Declines in Italy

    Record year-on-year decrease in Italian retail sales in May

    Key points:
    • High street spending down sharply, albeit at weaker monthly rate
    • Job shedding steepest in series history
    • Discounting and cost inflation reduce profitability


    The Italian retail sector remained in contraction during May, with sales again falling sharply in spite of widespread discounting. Cost pressures meanwhile grew from April’s recent low on the back of rising transport costs, thereby adding more pressure to margins. Consequently, firms shed staff at a marked and accelerated rate that was the steepest since data were first compiled in January 2004.

    High street spending across Italy contracted sharply on the month during May, albeit at a slightly slower rate than that registered during April. This was signalled by the seasonally adjusted Italian Retail PMI® posting at 35.8, up from 32.8. Sales fell for the fifteenth month straight, and panellists continued to highlight low consumer confidence and falling disposable incomes as the main factors behind the decline.

    German Sales Show Slight Growth

    German retail sales return to growth in May

    Key points:
    • Retail PMI points to marginal month-on-month rise in sales
    • Like-for-like sales higher than one year earlier
    • Wholesale price inflation eases markedly

    The seasonally adjusted Germany Retail PMI rose from 47.4 in April to 50.7 in May, to indicate a marginal increase in sales on a month-on-month basis. That said, the rate of expansion was lower than those seen throughout the first quarter of 2012. Companies that reported a rise in sales since April generally noted that more favourable weather conditions had resulted in higher customer footfall.

    Survey respondents indicated that actual sales fell short of initial targets for the second month running in May.

    Sharp Drop in Overall Sales, Revenues Decline at Near Record Pace

    Eurozone retail sales continue to fall sharply in May

    Key points: 
    • Retail PMI improves to 43.3, but still signals steep monthly drop in sales
    • Near-record annual fall in sales
    • Wholesale price inflation slows sharply

    Summary of May findings:

    The Eurozone retail sector remained firmly in contraction in May, according to PMI® data from Markit. Sales fell sharply on a month-on-month basis, and revenues compared with a year ago were down at a near-record rate. There were signs of easing pressure on retailer’s purchasing costs, however, as the rate of purchase price inflation slowed sharply to a 19-month low.

    This should bury the notion the eurozone recession will be short and shallow.

    Mike “Mish” Shedlock
    Click Here To Scroll Thru My Recent Post List

    Images: Flickr (licence attribution)

    About The Author

    Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.  Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

    You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.  Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.

    When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.


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