Rising sales in France and Germany were almost entirely offset by a further decline in Italy:
- France saw the strongest increase in sales, with month-on-month growth hitting a five-month high, linked in part to improved weather. The index increased from 51.1 in August to 54.2, representing a marked improvement from July's 18-month low.
- Germany recorded a more modest increase in sales than France. The rate of increase slipped compared with August (the index fell from 53.0 to 51.3), but the data signaled a continued recovery from the falling sales pattern seen in the three months to July.
- In contrast, Italy recorded a decline in sales for the seventh consecutive month. The rate of decline hit a 27-month high as the index fell from 47.8 in August to 44.1. Retailers reported that consumer confidence remained subdued.
Despite being up only slightly on August, sales rose on an annual basis in September for the first time in five months. The year-on-year index was up sharply from August's 17-month low of 45.1 to 52.5. Sales in France, rose for the first time in five months and showed the second-strongest annual gain so far this year. Sales were marginally higher than a year ago in Germany - though this represented an improvement on the declines seen in the previous four months - and fell for the fifth successive month in Italy, showing the second-strongest annual decline so far this year.
Sales by sector - growth led by clothing and food
The clothing & footwear sector reported by far the strongest increase in annual sales in September, with spend on seasonal items lifted by better weather (having fallen sharply in August). Moreover, the rise was the third- largest in the history of the survey. The food & drink sector also saw markedly higher sales than a year ago, with the improvement also often linked to better weather. A more moderate but still strong rise was seen in the pharmaceuticals sector. Sales in the autos & fuel sector continued to fall sharply, while a more modest contraction was recorded for household goods.
Sales against targets
Sales were again well below retailers' expectations in September, albeit with the smallest shortfall indicated since targets were met back in April. The index rose from 38.7 in August to 45.0. Targets were missed to a greater extent in Italy than Germany, while French retailers met their targets on average. By sector across all countries, targets were beaten by a survey- record margin in the clothing & footwear sector, and to a lesser but still marked extent in food & drink. The autos, household goods and pharmaceuticals sectors all missed targets.
Retailers expect to beat sales targets in October on average, with the expectations index dipping only slightly from 58.3 in August to 57.5, remaining well above the 50.0 neutral level. Retailers in all three largest euro countries were optimistic about beating targets in October, with French retailers again by far the most optimistic and German retailers the least confident. By sector, the strongest confidence was seen amongst clothing & footwear retailers, followed by the autos sector. Only retailers in the household goods sector expect targets to be missed in October.
Prices and margins - record high price pressures, led by food & drink sector
Average prices paid for goods by retailers rose at a new survey-record rate in September. The index reached 63.6, up from 61.6 in August, driven by an increase in the rate of inflation to a new survey high in Germany. Inflation was far weaker in France and Italy than in Germany (and in fact eased slightly in both countries), though in the former the rate of inflation remained close to survey-record levels. The steepest rise in prices was recorded in the food & drink sector for the third month running, where the rate of increase slipped only slightly from August's record high. Particularly steep rates of inflation were also seen for clothing & footwear and household goods.
Retailers' gross margins worsened during September, deteriorating at a rate only slightly less than the 19-month low seen in August (the index rose from 42.6 to 43.1). Margins were hit by a combination of higher purchasing costs and the need to keep resale prices low due to strong competition. Italian retailers recorded the sharpest deterioration in margins, French retailers the smallest.
Employment - marginal growth maintained
Retail sector employment in the Eurozone increased for the seventh consecutive month in September. The index fell from 51.3 in August to 50.3, indicating the weakest rise in the current period of job creation. Moderate growth of retail staffing in Germany was offset by declines in France and Italy.
Retailers' buying and stock trends
Stocks of unsold goods increased for a seventh consecutive month in September, largely caused by disappointing sales. The index fell slightly from 51.4 to 51.1, pointing to a modest expansion. Stocks rose in Germany and Italy, but fell in France for the first time in almost two years. Purchasing activity amongst Eurozone retailers increased in September, with the buying index reaching a five-month high of 51.7 (50.7 in August). Trends varied considerably by country, with strong growth of purchasing in France linked to optimism with regard to sales contrasting with the steepest decline for over two years in Italy. A modest increase was recorded in Germany.
