Eurozone Retail Sales Plunge at Strongest Pace Since Late-2008
The word of the day is plunge. Retail sales fell like a rock in Germany and fell at a record pace in France. Jobs and retail sales plunged at a record pace in Italy, and in general, did a nose-dive across the entire Eurozone.
German Retail Sales Plunge Into Contraction
Please Consider the Markit Germany Retail PMI® Report.
Fastest drop in retail sales since April 2010 as year-and-a-half run of growth comes to an end.
- Retail PMI falls sharply in April
- Steepest decline in margins for two years...
- ...despite wholesale price inflation hitting 15-month low
Sharp squeeze on operating margins
Lower sales and strong market competition resulted in a sharp and accelerated decline in margins across the German retail sector. The latest fall in margins was seventeenth in consecutive month and also the steepest for two years.
French Retail Sales Plunge at Record Pace
Please Consider the Markit France Retail PMI® Report.
French retail sales fall at survey-record rate in April
- Sales hit by weak economy and presidential elections
- Targets missed to greatest degree in 18 months
- Margin squeeze continues amid widespread discounting
French retailers reported a sharp reduction in sales during April. The month-on-month fall was the most marked recorded by the survey since data collection started in January 2004. Sales were also down considerably on a year-on-year basis, while previously set plans were again missed. The weak sales performance occurred despite evidence of substantial discounting and promotions among retailers, which resulted in a further steep drop in gross margins.
The headline Retail PMI® plunged to a series-record low of 41.4 in the latest month, from 50.2 in March. The latest reading was below the neutral 50.0 mark for the first time since January and indicative of a steep month-on-month decline.
The extent of the latest failure to meet targets was the greatest for one-and-a-half years. Panelists are nevertheless optimistic that sales will exceed previously set plans in May.
Factors expected by retailers to boost sales over the coming three months include the end of the presidential election, summer weather, promotions and new products.
Note the absurd level of optimism by French retailers.
Eurozone Retail Sales Plunge at Strongest Pace Since Late-2008
Please Consider the Markit Eurozone Retail PMI® Report.
- Retail PMI plunges to 41.3, lowest since November 2008
- All three countries surveyed post lower sales, with record decline in France
- Cost pressures for retailers at 16-month low
Plunging to its second-lowest level on record in April, the PMI hit 41.3, down from 49.1 in March. The latest figure signaled the largest monthly fall in retail sales across the single currency area since the depths of the global financial crisis in November 2008 (40.6).
Eurozone retail PMI figures are based on responses from the three largest euro area economies. For the first time since September 2010, retail sales fell across Germany, France and Italy. The rate of contraction in Germany was the fastest since April 2010, while French retailers posted a survey-record drop as they reported disruption due to the presidential elections. Italy continued to see the steepest overall rate of decline, however, as the pace of contraction reaccelerated to approach the record level posted in January.
The annual rate of decline in Eurozone retail sales was also one of the strongest since the survey started in January 2004. Sales have fallen on an annual basis each month since last June.
Record Job Losses, Record Retail Plunge in Italy
Please Consider the Markit Italy Retail PMI® Report.
Sharp decrease in retail sales leads to survey-record job losses
- Sales fall at second-sharpest annual rate in series history
- Confidence sinks to four-month low
- Cost inflation slowest since December 2010
The seasonally adjusted Italian Retail PMI® – an indicator of month-on-month changes in total retail sales – fell to the greatest extent in survey history in April, dropping from 42.4 in March to 32.8. This sharp and accelerated decrease in high street spending was the second-fastest since December 2008, and extended the current sequence of contraction in the sector to 14 months.
Retailers in Italy sped up their rate of job shedding in April, with staffing levels falling at the fastest
pace since data were first compiled in January 2004. This latest reduction in employment was
primarily attributed by survey respondents to lower sales and rising input costs.
For months I have been reading the apologists at Markit (and elsewhere) predict a short, shallow Eurozone recession.
Check this snip from my April 4, 2012 post: Eurozone Composite PMI® Signals Recession Says Markit; France in Renewed Decline, German Growth Weakens, Italy and Spain Contract Further:
Chris Williamson, Chief Economist at Markit said:
“A slight easing in the rate of decline of the Eurozone service sector was insufficient to offset the first decline in manufacturing output for three months, causing the overall economy to contract again in March.
“With the exception of a marginal expansion seen in January, the economy has been in continual decline since last September. Although the average rate of decline seen over the first quarter eased compared with the final three months of last year, the survey data nevertheless indicate that the region has slipped back into a technical recession.
“The downturn is currently only very mild, however, with gross domestic product probably falling by just 0.2% in the first quarter. Furthermore, with business confidence in the service sector running at a far higher level than late last year, the recession may also be brief.”
I have been critical of Market analysis for months and this is the worst yet.
First they said Germany would prevent a recession, then Germany would decouple, now they suggest this is only a "technical" recession and the "the recession may be mild and brief".
The European recession will be neither mild nor brief. Spain, Portugal, and Greece are in economic depressions with no end in sight. Spain and Italy (the 3rd and 4th largest eurozone markets) are poised for steeper slides. Germany will not be immune to this as I have stated for months on end.
German manufacturing contracted in March and services sector will soon follow. For some reason, Markit economists cannot figure this out.
This was extremely easy to predict, yet most blew it.
Source: Global Economic Analysis