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Low Consumer Confidence Stings Europe
Sep 8, 2004
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The Bloomberg Retail Purchasing Managers' Index (PMI) shows a decline in retail sales for the euro area. The Bloomberg Retail PMI, a barometer of the retail sector in the Eurozone, declined one-and-a-half points in August to 49.7, down from 51.2 in July. Index readings higher than 50.0 signal an increase in sales during the month; readings less than 50.0 signal a decrease.

A month-on-month rise in sales in Germany was offset by a marginal fall in sales in France and a larger decline in Italy, the Index showed. Retailers attributed falling retail sales to strong competition, fragile consumer confidence, and a reluctance to spend.

Results show only a slight decline in Eurozone like-for-like sales compared to the previous year, despite a sharp decline in Italian year-on-year sales, as indicated by an index reading of 49.0 (up from 48.8 in July). Germany also reported a year-on-year decline in sales, although the index rose from 45.0 in July to 48.8 to suggest an easing in the rate of decline. Meanwhile, France experienced a significant increase in year-on-year sales, with the index recording 54.8.

Actual sales in August fell short of retailers' targets on average. The Food and Drink sector showed the largest shortfall, while Clothing and Footware was the only sector to beat targets. Retailers also showed continued pessimism about their likely sales performance in September.

Other results include a fourth consecutive monthly decline in purchasing of goods for resale by retailers across the three economies surveyed – Italy, Germany, and France. Stocks also declined for the third consecutive month as retailers streamlined their inventories.

Increases in the price of raw materials were highlighted as the key reason for spiraling purchase prices. Combined with strong competition, this further squeezed retailers' margins, which declined sharply across the region.

The results mark the launch of the Bloomberg Retail Purchasing Managers' Index (PMI), a new monthly survey that indicates economic conditions in the Eurozone retail sector. Compiled by NTC Research Ltd, the Bloomberg Retail PMI questions more than 1,000 retail executives in Germany, France, and Italy. These countries represent approximately 75 percent of total Eurozone retail sales, according to Bloomberg, and national data is weighted together according to each country's contribution to total Eurozone retail sales to form the Eurozone Retail PMI.

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