- Germany recorded solid growth, with sales rising for the first time in four months following a sharp decline in July. An improvement in economic conditions, higher consumer spending and successfule advertising were all cited as reasons for growth. The index recorded 53.0, from 45.9 in July.
- Sales in France increased for the first time in three months, though only modestly and at a rate below that seen in Germany. Whilst advertising and the opening of new outlets were reported to have supported growth, there was again evidence that relatively poor weather had dampened sales and footfall. The index increased to 51.1, from July's 46.7.
- In contrast to the other two countries, Italy again recorded a decline in sales. It was the sixth successive month in which sales have fallen, although the rate of contraction eased in August to its lowest since March. The index posted 47.8, compared to 46.1 in July.
Although improving on the monthly measure, Eurozone August retail sales were nonetheless well down on levels seen a year earlier. The year-on-year index remained below the 50.0 no-change mark for a fourth successive month and, at 45.1 from 45.8 in July, signaled the sharpest decline for nearly a year-and-a-half. Sales fell across the region, with Germany recording by far the strongest decline (sales fell at the fastest annual rate for seventeen months). Relatively more modest falls were recorded in France and Italy, with sales declining at the sharpest pace for three months in France and the rate of contraction easing markedly in Italy.
Sales by sector
Annual sales were higher in food & beverage and pharmaceuticals during August, with the latter sector recording a particularly strong rate of expansion while the rise in year-on-year sales recorded in food & beverage was only marginal. In line with the recent trend, sales in autos & fuels were well down on a year ago, whilst there were marked falls registered in the clothing & footwear and household goods sectors.
Sales against targets
Sales were again well below retailers' expectations during August, though a rise in the index from the twenty-five month low of 36.8 to 38.7 indicated that the shortfall was not as great as in July. Targets were missed to varying extents across the region. The greatest shortfall was in Germany, where targets were missed to the greatest magnitude for thirty-nine months. Targets were also missed across all sectors, with the greatest shortfalls in autos & fuel and clothing & footwear.
The index of retailers' expectations improved markedly on July's one-year low of 51.8, rising to 58.3. French retailers were by far the most optimistic, despite German and Italian retailers registering positive sentiment following the pessimism seen in July. By sector, only household goods registered negative sentiment. Of note, confidence in the autos & fuel category reached a fifteen-month high.
Prices and margins
Reflective of continued price pressures in the supply chain, average prices paid for goods by retailers rose at the sharpest rate in the survey history in August. The index recorded 61.6, up from 57.7 in the previous month, with a pick-up in inflation to a near five-year high in Germany underpinning the overall increase in prices. Strong rises were also recorded in France and Italy, with rates of inflation reaching four- and eight-month peaks respectively.
Retailers' gross margins contracted at the sharpest rate for nineteen months in August, as purchase prices rose sharply and pricing power remained weak. The index recorded 42.6, down from 43.6, with Italian retailers recording the sharpest deterioration in margins.
Employment
Retail sector employment in the Eurozone increased for the sixth month running during August, although the rate of growth remained only modest and was unchanged from July. The index recorded 51.3, with moderate rates of expansion recorded across all three countries.
Retailers' buying and stock trends
Stocks of unsold goods increased in August for a sixth successive month, as sales remained below expectations. The rate of growth was the weakest in the current period of expansion, however, as highlighted by an index reading of 51.4, from 52.3 in July. Strong inventory growth in France was offset by a third successive monthly contraction in Germany.
Purchasing activity amongst Eurozone retailers increased marginally in August, with the buying index improving on July's six-month low of 48.6 to reach 50.7. Growth of purchasing was recorded in France and Italy, where retailers looked to bolster stocks in line with sales expectations. In contrast, there was a further fall in purchasing activity in Germany, where respondents commented that the recent under-performance of sales had led them to reduce their levels of input buying.
