since May 2004. Lower sales were partly the result of bad weather deterring shoppers.
countries:
- Germany saw the steepest contraction - albeit by only a narrow margin - with sales dropping for the third consecutive month and at the fastest rate since the VAT-induced slump of the first two months of the year. The index fell sharply from 49.2 in June to 45.9.
- Sales in Italy fell for the fifth successive month, with the rate of decline gathering pace to the highest since June 2005. The index fell slightly from 46.5 in June to 46.1.
- France saw a fall in sales for the second month running, and posted the steepest rate of decline since January 2006. The index fell from 48.2 to 46.7.
Eurozone sales were also lower on an annual basis in July, the third successive month of falling year-on-year sales. The year-on-year index fell from 48.6 to 45.8, signaling the steepest decline since March 2006. Year-on- year sales fell in all three countries, with Italy seeing the strongest drop for the second month running, followed by Germany and then France. While France saw a slight easing in the rate of decline to only a marginal pace, sales fell at the fastest annual rate for sixteen months in both Germany and Italy.
Sales by sector
Sales rose on a year ago in the clothing & footwear and pharmaceuticals sectors, although in both cases the increases were only modest, with sales in the latter showing the weakest rise for six months. Sales in autos & fuel again showed the steepest year-on-year decline of all sectors in July. Food & drink and household goods also saw marked declines on sales levels seen a year ago, linked in many cases to poor sales of seasonal items due to bad weather. Sales of food & drink contracted for the first time in sixteen months.
Sales against targets
Monthly sales targets were missed to the greatest extent for just over two years in July. The index fell from 39.4 to 36.8. Targets were missed to significant extents in all three countries, led by Germany (where the shortfall was the largest for over three years). Targets were also missed in all main sectors, with the largest shortfalls seen for household goods (which saw the largest shortfall for fifteen months), autos and food & drink (the latter seeing the largest shortfall for twenty-five months).
he index of retailers' expectations of beating planned targets in the coming month fell sharply in July, slipping to its lowest level for a year
(down to 51.8 from 56.3 in June). Targets were expected to be missed in the autos & fuel, household goods and pharmaceuticals sectors. Clothing & footwear and food & drink retailers were optimistic, largely reflecting hopes of better weather. By country, French retailers were again optimistic about beating targets (though far less so than in recent months), but German and Italian retailers were both pessimistic.
Prices and margins
Prices paid for goods by retailers continued to rise on average in July. The rate of inflation picked up slightly to a three-month high, but
remained below that seen throughout much of last year. The prices index recorded 57.7, up from 57.0 in June. Trends varied considerably by country, with prices rising sharply in Germany (where the rate of increase hit a seven-month high), but inflation moderating slightly in both Italy and France (the latter seeing the weakest rise for sixteen months).
Retailers' gross margins fell in July at the steepest rate since February of last year, reflecting a combination of rising costs and weak pricing power. The index fell for the third month running from April's record high of 48.7 to 43.6. Margins deteriorated at increased rates in all
three countries, with Italy continuing to see the strongest decline.
Employment
Eurozone retail sector employment rose for the fifth month in a row. The rate of growth picked up marginally but remained only very modest as retailers held back on recruitment in the face of weak recent sales and the uncertain outlook. The index edged up from 50.9 to 51.3. Similar subdued rates of growth were recorded across all three countries.
Retailers' buying and stock trends
Retailers' stocks of unsold goods rose for the fifth successive month in July, largely due to weaker than anticipated sales. Of note, France saw the largest rise in stocks for a year. Italy saw a more muted increase compared to France, but the expansion was nevertheless the largest for seven months. In contrast, stocks fell in Germany as retailers pared-back their purchasing. The stocks index registered 52.3, down from 52.6 in June.
The amount of goods bought for resale by Eurozone retailers fell for the first time in five months in July as buyers sought to limit unwanted
growth of inventories in light of weaker than expected sales in recent months and an uncertain outlook. Buying fell in all three countries, with
the sharpest fall indicated in Germany. The buying index for the Eurozone as a whole fell from 50.5 to 48.6.
