Eurozone suffers retail sales slide

1 September 2010

1 September 2010 | Angeline Albert

Retail sales in the eurozone fell slightly last month after a bumper summer boosted by good weather and the World Cup football tournament.

The latest retail data from the Purchasing Managers’ Index (PMI), supplied by research firm Markit, signalled that sales for the region fell for the first time in three months.

The Eurozone Retail PMI – which tracks monthly changes in the value of sales at retailers – came in at 49.7, just below the 50 no-change mark. This is a weaker performance than July, which witnessed the fastest growth since May 2008.

The overall fall in eurozone retail sales reflected a setback in the German sector. It suffered a retail hangover after the very favourable, but temporary, conditions felt by the World Cup in June and July.

While retail sales dropped off in Germany, they rose further in the eurozone’s second largest economy, France, and declined at a weaker rate in Italy.

Meanwhile, eurozone sales were still higher than one year earlier for the second month running. Annual growth was signalled in France and Germany, while the year-on-year decline in Italy eased sharply during the month.

Trevor Balchin, senior economist at Markit and author of the Eurozone Retail PMI, said: “August retail PMI data for the eurozone placed a question mark over the sustainability of the consumer recovery, but the monthly slide in sales must be viewed alongside a very strong July that was boosted by good weather and the football World Cup.”

“Unless a further fall is recorded in September, the July and August PMI figures taken together point to quarter three being the strongest quarter for retailers since quarter four 2006,” said Balchin. “Sales remained up on a year earlier in the latest period and retailers gradually added to their workforces.”

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