Retail sales in the eurozone fell in July as France and Italy both saw accelerated contractions in trade, the latest PMI® 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.
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.