* France saw the strongest rise in retail sales among the euro area's three largest countries for the third successive month. Moreover, the rate of growth was the strongest for ten months and the second- sharpest seen since the survey began at the start of 2004 (the index rose from 56.8 to 58.6).
* In Germany, sales continued to recover from the slump caused by the VAT increase at the start of the year, rising strongly in April to register the sharpest gain for five months (the index rose from 52.8 to 55.6).
* In contrast, sales fell at a faster rate in Italy. The index dropped from 49.6 to 47.5, recording the steepest fall in sales since last October and the second successive monthly fall. Retailers blamed low consumer confidence and intense competition for the deterioration.
Compared to a year ago, Eurozone retail sales rose at the strongest pace recorded by the survey to date in April. The year-on-year index was up for the third month in a row from 56.3 in March to a record high of 58.4. By far the strongest gain was seen in France, where the year-on-year index also hit a survey high. Sales were also well up compared to a year ago in Germany (though to a lesser degree than that seen in March), while year-on-year growth slowed sharply in Italy to register only a modest increase.
Sales by sector
In April, the strongest sales compared with the same period a year ago were seen for clothing & footwear and food & drink, both of which rose sharply across France, Germany and Italy as seasonal items sold well in the warm weather. Strong annual sales growth was also recorded for household goods and pharmaceuticals. Only auto retailers reported a year-on-year decline in sales.
Sales against targets
Sales beat retailers' targets for the first time it the survey's history in April, as sales of food & drink, clothing & footwear and pharmaceuticals all exceeded expectations. The index rose steeply for the second month running, up from 46.7 in March to 51.0 in April. Sales of autos continued to miss targets by a wide margin, however, and sales of household goods narrowly missed expectations. Targets were beaten to the greatest extent yet seen by French retailers, while targets were beaten for the first time since last May in Germany. Sales again fell well short of targets in Italy, however.
Retailers' expectations of beating planned targets in the coming month fell back from the recent peak seen in March (but remained strongly positive). The index dropped from 63.0 to 57.9. Sentiment about beating sales targets remained highest in France (though it dipped from March's record high), followed by Germany. For the first time for nine months, Italian retailers expect to miss their targets on average next month.
Prices and margins
Prices paid for goods by retailers rose at a slightly faster pace than March, but the rate of increase continued to run well below that seen throughout much of last year. The prices index edged up from 57.0 to 57.8. The rate of inflation picked up in France, hitting a survey record high, but slowed in Germany and Italy, hitting two- and fifteen-month lows respectively.
Retailers' gross margins fell in April, as they have done over the history of the survey, but the decline was only modest and by far the weakest indicated to date. The index rose from 47.7 to a record high of 48.7. Margins improved at a survey-record pace in France, while the rate of decline eased in Germany. In contrast, a sharper rate of margin deterioration was seen in Italy, as retailers faced rising wholesale costs but price resistance among consumers.
Employment
Eurozone retail sector employment rose at an increased pace in April, showing the third-largest monthly gain yet recorded by the survey. The index rose from 51.1 to a nine-month high of 52.2. Staffing levels rose in all three countries, led by Germany (where the rate of increase was the joint second- highest on record), followed by France (where growth hit an eight-month peak). However, employment growth slowed to only a very modest pace in Italy.
Retailers' buying and stock trends
Having fallen in the first two months of the year, the amount of goods bought for resale by Eurozone retailers rose for a second successive month in April, rising at the fastest pace for ten months (an index of 54.1 versus 51.8 in March). Growth of buying was led by a record rise in France but offset by a slight fall in Italy. Retailers' stock holdings also rose for the second month running, though the stocks index dipped from 52.7 to 51.7 to register an easing in the rate of growth.
