European Retail Sales Drop Sharply in May
European retail sales experienced their steepest decline in recent memory, falling more than six points on the Bloomberg Eurozone Retail Purchasing Managers’ Index in May.
The index is important to many U.S.
brands that sell to the European community, as it provides a barometer for economic trends and helps with forecasting.
The measurement, taken in mid-May from 1,000 retailers in France, Germany and Italy, fell from 54.6 to 48.4, the biggest drop in the history of the index. The index is structured so that 50 points indicate a no-change level.
The recent decrease signaled a marked deterioration from the robust expansion seen in March and April and a faster pace than the previous decrease in February.
Analysts blamed the drop on poor weather, fewer promotional activities and an increase in competitors. Apparel and footwear experienced the most severe drop-offs of all categories, according to the report.
Weaker month-on-month sales performance was evident in all three countries covered by the survey. France was the only country not to see an overall drop in retail sales, although growth slowed from 58.6 to 50.1 points from April.
Sales in Germany fell for the first time in three months from April’s five-month high of 55.6 to 47.3 points. Sales declined for the third consecutive month in Italy, though the index rose from 47.5 to 47.7, indicating a modest easing.
In Italy, retailers reported poor trading conditions and a lack of government incentives for consumers, while in France the recent presidential elections were highlighted as being a key factor for the stagnation in sales there.
Compared with a year ago, Eurozone sales slumped in May from 58.4 to 46.7, signaling the first decline in annual sales in 14 months.
Year-on-year sales fell in all three countries, with France seeing the strongest decline, followed by Germany and Italy.
Prices paid for goods by retailers continued to rise at a strong pace in May, with the rate of inflation slipping but remaining above the long-run average of the survey.
The prices index recorded 57.4 compared to 57.8 in April. The rate of inflation slowed in all three countries, hitting a 23-month low in Italy and a 14-month low in Germany.
In France, inflation eased only slightly and remained close to April’s record high.
Retailers’ gross margins fell in May, as they have throughout the history of the survey.
Moreover, the rate of decline was the fastest in three months. The gross-margins index fell from April’s record high of 48.7 to 46.0. Retail margins deteriorated in all three countries, with Italy registering by far the steepest decline.
Eurozone retail-sector employment increased modestly in May, rising for the third successive month. However, the rate of job creation weakened slightly compared with April, as the index slipped from April’s ninemonth high of 52.2 to 51.3.
Staffing levels rose in Germany and Italy, with the former posting the stronger expansion.
In contrast, retail jobs fell slightly in France for the first time in four months.
—Robert McAllister
