- Germany experienced an easing in the rate of decline that registered as only a marginal drop in month-on-month sales. The index rose from 46.0 in June to 49.8, signaling the slowest rate of contraction since sales began falling in June of last year. It was also the weakest decline among the three countries in July (Germany had posted the fastest contraction one month previously).
- France posted an acceleration in the rate of sales decline, registering the steepest monthly fall since March and a pace of contraction greater than the average seen over the first half of the year. The decline was the fourth-largest recorded over the survey's five-and-half year history. The index fell from 49.4 to 46.0.
- Italy saw sales fall at the fastest pace since March, and registered the steepest month-on-month sales deterioration of the three largest euro economies. Its index slipped from 47.0 to 45.6. Unlike France, Italy remained above the average recorded over the first half of the year.
The continued month-on-month decline in retail sales contributed to a sharper annual rate of contraction in July. The year-on-year decrease remained less severe than the trends seen in Q4 and Q1. The year-on-year sales index fell from 42.7 in June to 39.8. A moderation in the annual rate of decline in Germany was offset by steeper falls in both France and Italy, with the latter continuing to see the fastest pace of contraction of the three countries. This has been the case since the start of last year.
Sales by sector - rates of contraction accelerate for all product areas except autos
In July, retail sales were lower than levels recorded one year earlier for all main product sectors. Greater declines were seen in all cases except autos. Here, the rate of contraction remained less marked than what was noted during the second-half of last year, attributable to car scrappage incentives. Food & drink continued to see the weakest rate of sales decline of the five main product sectors, followed by pharmaceuticals. Clothing & footwear and household goods suffered the sharpest declines respectively.
Sales against plans - targets missed in all three countries and for all product sectors
The sales-against-targets index fell from 36.6 in June to 35.8, registering a further shortfall of actual sales against original plans. Sales were again below targets in all three countries in July, led by France, where retailers reported the second-worst performance in the history of the survey for that country. German retailers reported the smallest shortfall of the three countries in July. By product sector, targets were missed to the greatest extent in clothing & footwear, while food & drink retailers were the least disappointed.
Expected sales next month - expectations at six-month low
In July, confidence among retailers about the month ahead worsened across the Euro-Zone. The index of expected sales dropped for the fourth consecutive month to hit a six-month low of 44.7 compared to 49.8 in June. The number of retailers expecting to miss targets in July exceeded those that anticipate targets to be beaten in all three countries, with Italian retailers the most pessimistic overall. Negative sentiment eased in Germany, but worsened in France.
Prices and margins - inflationary pressures remain subdued
The prices paid index rose from June's record low of 50.0 to 50.7 in July. Nevertheless, the index registered the second-weakest rate of increase in the survey history. Weak demand was reported to have led to some price discounting by wholesalers, most notably for food & drink where prices fell for the third month running. Marginal increases in wholesale prices were registered across all three countries, with French retailers seeing a negligible rise. Retailers' margins deteriorated in the face of weak demand, with the seasonally adjusted index dipping from 42.1 to 41.6. Italy reported the sharpest fall in retail margins.
Employment - cost pressures result in further job shedding
Retail employment in the Euro-Zone was cut for the sixteenth successive month in July. The rate of job losses gathered pace as retailers reported increased pressure to cut costs in the face of weak demand and diminished margins. The Employment Index sank from 48.1 to 47.4. A stabilization of the German retail workforce (50.1) was countered by further declines in France and Italy, with the latter seeing the steeper rate of contraction (45.4).
Retail stocks - survey-record fall in inventories
The survey highlighted a record rate of decline of inventories of unsold goods in July (42.1), reflecting deliberate moves by retailers to cut stock through discounting and reduced wholesale purchases (43.8). French retailers led the decline, though lower stock levels were also seen in Germany and Italy. The need to cut stock was most commonly linked to concerns over weak demand.
