Month-on-month sales at Eurozone retailers rose marginally in late fall, according to the Bloomberg Eurozone Retail Purchasing Managers' Index (PMI) for November.
While the latest growth in the most recent release was the fourth of the past five months, the data in the monthly survey that indicates economic conditions a month ahead of government-issued figures also shows the rate of expansion remained only marginal.
The seasonally adjusted Bloomberg Eurozone Retail PMI remained above the no-change mark of 50.0 in November, signaling further growth of monthly retail sales. Retailers reported a continued reliance on price discounting and other promotional activity in order to achieve higher sales during the month, creating further pressure on margins. Furthermore, with purchase prices rising at a strong rate on average, profits fell sharply in November.
Monthly retail sales in Italy rose for the third month running, remaining the main source of growth for November. Germany and France, the other national retail sectors covered by the survey, registered slight contractions in monthly sales in November, although in Germany the rate of decline eased slightly from October.
Year-on-year retail sales for the region fell again for the 19th-month running, according to the latest survey data. The rate of contractions, however, eased from the previous month and equaled the one-year low registered in August.
>>Sales against targets
The index of actual retail sales in the Eurozone fell short of planned sales, as they have every month for the past two years. The latest failure of retailers to meet targets suggested that consumers' spending power remained weak. However, retailers expected sales in December to meet planned levels.
>>Retailers' stock levels
Although retail sales in the Eurozone rose on a monthly basis in November, retailers reduced their purchases slightly, as the recovery of consumer demand remained tentative and firms sought to prevent growth of stock levels. Overall, stock levels of goods for resale were almost unchanged from October, registering only a negligible expansion.
>>Margins and prices
The rate of purchase price inflation in the Eurozone retail sector picked up for the third month running in November. Retailers reported that wholesalers had raised their prices mainly in response to higher energy and transport costs, as the effects of increased oil prices continued to be felt. Strong increases in average purchase prices placed further pressure on Eurozone retailers' gross margins in November, which continued to fall at a sharp rate. Aside from higher costs, retailers reported that the latest drop in profits reflected price discounting intended to improve sales amid stiff competition for business in the sector.
Despite the recent growth in monthly sales, Eurozone retailers cut staffing levels for the second successive month in November. The main reasons retailers gave for the latest round of job shedding were either a lack of sales demand or the need to make cost savings, as average purchase prices rose at a strong rate.