- France was the only country not to see a fall in retail sales, although growth slowed sharply from April's strong pace to near-stagnation (the index fell from 58.6 to 50.1).
- Sales in Germany fell for the first time in three months, with the index sliding from April's five-month high of 55.6 to 47.3. That figure signaled that Germany was the weakest performing of the three countries covered.
- Sales declined for the third consecutive month in Italy. The index rose marginally from 47.5 to 47.7, though this merely pointed to only a very modest easing in the rate of contraction.
The latest anecdotal evidence from the survey suggested that poor weather conditions in May compared to April had negatively impacted on sales during the month. Other reasons put forward by panelists included the establishment of new competitors and lower levels of promotional activity. In Italy, retailers reported poor trading conditions and a lack of government incentives for consumers, while in France the recent presidential elections were highlighted as being a key factor for the stagnation in sales there.
Compared to a year ago, Eurozone sales slumped in May from April's survey- record rate of growth, posting a contraction. The year-on-year index fell steeply from 58.4 to 46.7, signaling the first decline in annual sales for fourteen months. Year-on-year sales fell in all three countries, with France seeing the strongest decline, followed by Germany and Italy.
Sales by sector
The deterioration in year-on-year sales in May was led by a steep decline in the clothing & footwear sector, which contrasted with the warm-weather related surge in buying seen the previous month. The household goods sector also saw a marked reversal, with sales falling, having risen strongly in April. Auto sales also continued to fall sharply compared with a year ago. Only food & drink and toiletries & cosmetics retailers reported year-on-year increases in sales in the latest survey period.
Sales against targets
Having exceeded targets for the first time in the survey's history in April, retailers missed their planned sales to the greatest extent for almost two years in May. Only sales of pharmaceuticals beat targets. The steepest shortfall was seen for clothing & footwear, followed by autos & fuel and then household goods. Targets were missed to approximately equal extents across all three countries.
The index of retailers' expectations of beating planned targets in the coming month rose from 57.9 in April to 60.1 in May, suggesting an upturn in sales growth is expected for June. Expectations improved for all sectors except household goods. By country, improvements in expectations in France and Italy were offset by a deterioration in Germany (though retailers there remained confident of meeting planned sales in June).
Prices and margins
Prices paid for goods by retailers continued to rise at a strong pace in May, with the rate of inflation slipping but remaining above the long-run average of the survey. The prices index recorded 57.4 compared to 57.8 in April. The rate of inflation slowed in all three countries, hitting a twenty- three month low in Italy and a fourteen-month low in Germany. In France, inflation eased only slightly and remained close to April's record high.
Retailers' gross margins fell in May, as they have throughout the history of the survey. Moreover, the rate of decline was the fastest for three months. The gross margins index fell from April's record high of 48.7 to 46.0. Retail margins deteriorated in all three countries, with Italy registering by far the steepest decline.
Employment
Eurozone retail sector employment increased modestly in May, rising for the third successive month. However, the rate of job creation weakened slightly compared to April, as the index slipped from April's nine-month high of 52.2 to 51.3. Staffing levels rose in Germany and Italy, with the former posting the stronger expansion. In contrast, retail jobs fell slightly in France for the first time in four months.
Retailers' buying and stock trends
The amount of goods bought for resale by Eurozone retailers rose for a third consecutive month in May. Although the rate of expansion slowed from April, increased purchasing points to expected sales growth in coming months (the index recorded 51.5 against 54.1 in April). Growth of purchases in France and Germany was partly offset by a fall in Italy. Stock holdings also rose for a third successive month, and at a slightly faster rate than in April (the index was up from 51.7 to 52.3). Retailers' stocks increased in all three countries, although in many cases higher stocks were linked to weaker-than- expected sales in May.
