Sales fell in all three of the largest euro countries in June:
- Italian sales showed by far the strongest rate of decline of the three countries and have underperformed the Eurozone average throughout the first half of 2008 by a wide margin. The month-on-month sales index fell from 38.8 in May to 36.3, signaling the second-steepest decline in the survey's history. Falling sales were linked to low consumer confidence and reduced spending power due to the economic slump and high fuel and food prices.
- German sales also fell markedly, a reverse from the sharp rise posted in May. The index slumped from May's eighteen-month peak of 56.6 to 44.9.
- French retail sales showed the slowest rate of decline among the three countries covered, but this was still in marked contrast to the substantial increase recorded in May. The index fell sharply from May's twenty-three month high of 59.6 to 48.7.
Eurozone retail sales also fell sharply on a year-on-year basis in June, posting the second-steepest fall in the past twenty-seven months and representing a marked contrast to the thirteen-month peak in growth seen in May. The year-on-year sales index dropped from 56.1 to 43.6. On average, year-on-year sales over Q2 as a whole showed the steepest fall for three years. Lower sales than a year ago were seen in all three countries in June, led by a particularly sharp fall in Italy. This was tempered by a marginal decline in Germany.
Sales by sector - food & drink saw any notable sales rise, linked to higher prices
Food & drink retailers again reported the strongest year-on-year increase in sales revenues, following May's record rise, largely reflecting higher prices. The other sector to see any growth in sales was pharmaceuticals, which saw a very marginal increase. Sales of clothing & footwear, household goods and autos & fuel all fell well below levels of a year ago, with the latter seeing the sharpest decline.
Prices and margins - wholesale prices continued to rise at strong pace, hitting margins
The rate of increase in prices paid for goods by retailers eased slightly from May's recent peak in June, but nevertheless posted one of the strongest monthly rises seen over the survey history. The prices index fell from 68.3 to 67.1, remaining well above the 50.0 no-change level. Germany saw the strongest rate of inflation, which hit a nine-month high and was the second-sharpest rise indicated ever in the survey history. Meanwhile, purchase price inflation eased in both Italy and France with the latter seeing the weakest rise of all three countries as the rate slowed to a nine-month low.
Purchase prices rose in all sectors except clothing & footwear, where a slight decline was recorded as suppliers offered discounts to stimulate sales. Inflation softened for all other product categories but remained relatively steep, especially for food & drink and household goods.
Retailers' margins showed the second-largest deterioration in the survey history in June, linked again in many cases to rising wholesale costs. The margins index fell from 43.0 to 39.9. Italian retailers continued to report by far the sharpest deterioration in margins, although profit margins were also squeezed in both France and Germany.
Sales against targets - targets missed for all product categories
Sales targets were missed to an overall extent exceeded twice in the survey history in June. The index of actual sales relative to planned sales fell sharply from 45.2 in May to 35.1. Italy saw the greatest shortfall against targets for the eighth straight month, followed by France and then Germany. By sector across all countries, targets were missed for all sales categories, though the shortfall for food & drink was marginal. Targets were again missed to the greatest extent in the autos & fuel sector, followed closely by clothing & footwear and household goods.
Expected sales against targets next month - optimism weakened to five-month low
Retailers' optimism about beating targets in the coming month moderated in June. The expectations index eased down from 56.9 to 52.4. French retailers were again by far the most confident about beating targets while, in Italy, expectations were for targets to be exceeded by a narrow margin. In contrast, German retailers expect to miss targets for the first time in five months. Sales are expected to beat targets across all product sectors in June except household goods. By far the greatest optimism was again seen in the food & drink sector.
Employment - steepest fall for over two years
The employment index fell from 49.9 to 48.6 in June, signaling a drop in staffing levels at Eurozone retailers for the third successive month and the largest monthly decline since February 2006. Headcounts were cut due to concerns over the fragility of demand in coming months and the need to reduce costs in the face of rising wholesale prices. Retail employment fell for the sixth month running in Italy, the first time in six months in France and for the first time in two months in Germany.
Retailers' buying and stock trends - retail buying fell, but stocks rose further
The amount of goods purchased for resale by Eurozone retailers fell marginally in June as companies sought to keep stock levels to a minimum as a result of cost considerations. The index of purchases dropped from 50.7 to 49.8. Higher levels of purchasing in France and Germany were countered by a marked decline in Italy. Across the Eurozone, the level of unsold retail stock continued to rise despite the overall fall in purchases. The stocks index registered 54.5, down from 55.6 in May. Similar rates of growth were indicated across all three countries, with Germany slightly ahead.
