Eurozone Retail Sector Shows Signs Of Softening
There is little doubt that this current recovery is largely a consumer led one across the developed economies. It is for this reason that recent weakness in the retail sector in the Eurozone is cause for concern. The Markit Economics Purchasing Managers Indices (PMI) for the retail sectors across Europe have this morning largely come in softer than previous months. The headline Eurozone Retail PMI for the month of September is now reading at 44.8, this represents a fall from the August figure of 45.8. This is a moderate drop in the figure and in isolation could be considered nothing more than a blip on the recovery path, it does however need to be taken in the context of a pervasive slowing in almost all major economic sectors across the Zone.
Many of the Eurozone’s smaller periphery nations are finally experiencing signs of growth, some of which represent impressive recoveries, it is the core nations however that are now weighing the bloc down. Germany’s Retail PMI number this morning was reported as falling from 49.4 in August to 47.1 in September. The French index dropped significantly from 45.5 to just 41.8. Among the three largest economies in the Eurozone it is only Italy that has demonstrated a pick up in it’s retail sector, the September number is showing at 45.4 compared to August’s 40.8, Italy however is coming from a low base in this regard.
These September figures are providing an early indication as to the likely direction of the actual Retail Sales numbers due at the end of this month. The disappointment factor arises because of the strength of the actual August Retail Sales numbers, particularly in Germany, overall Retail Sales rose 1.2% in the Eurozone on the month. One month’s figures in this sector however come with a health warning, a short period of discounting through seasonal sales reductions can often trigger a short term release of pent up demand.
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