EU retail sales fall again

Retail sales in the Eurozone have fallen for the twelfth successive month, at the same time that inflationary pressures have remained strong.  If anything, the rate of decline accelerated in October, according to the latest Markit Purchasing Managers’ Index, published today.

The PMI fell back from September’s three-month high of 47.1 to 45.3 in October, and the latest figure is also below the average of 46.0 for the third quarter (any figure lower than 50.0 signals a downturn).  The PMI figures are based on responses from the three largest Eurozone economies.

The acceleration in the month-on-month pace of decline reflected stronger falls in both France (seven months of decline) and Italy (20 months of decline), through Germany bucked the trend with a marginal increase in sales for the first time in three months.

Commenting on the data, Trevor Balchin, Markit’s senior economist, said that there is little sign of an imminent return to growth in retail sales.  In support of this pessimistic forecast, he quoted continuing job losses in retail operations and falling purchases of new stock, which still did not alleviate downward pressures on margins.

Despite the weakness of retail sales, average wholesale prices continued to rise sharply, the strongest pressures being felt again in food and drink, followed by clothing and footwear.  Squeezed between these two wedges, gross profit margins declined at the fastest rate in three months.

The PMI figures are worse than what one would have expected in the light of the EU’s flash estimate of consumer confidence indicator which remained broadly stable in both the EU and the Eurozone in October, falling by 0.2 and 0.3 points respectively. However, the indicator in October was around 25 points below the long-term average.

The poor retail figures reflect the recession in certain European economies and poor economic growth.  So much so that, according to the EU’s Economic Sentiment Indicator, published today, economic sentiment declined by 0.7 points in the Eurozone though it remained unchanged in the EU. 

According to the latest retail sales figures available for each member of the EU, Malta’s retail trade increased by 1.0 percent in August over July, after dropping consistently in the previous five months.