The January Bloomberg Eurozone Retail Purchasing Managers' Index (PMI), an indicator based on a mid-month survey of economic conditions in the euro area retail sector, fell sharply from 52.1 in December to 47.9 in January after allowing for seasonal influences. The index fall was the second-largest in the 3-year history of the survey and, by slipping below the 50.0 no-change level, indicated the first drop in retail sales for 10 months, with sales falling at a rate not seen for 23 months.
The fall in month-on-month sales largely reflected a steep sales drop in Germany, which contrasted with strong growth in previous months and was widely linked to January's increase in sales tax. The drop in German sales was the largest for 2-1/2 years (an index of 43.9, down from 55.2 in December). However, sales growth also deteriorated markedly in France, slowing for the third consecutive month to a 10-month low of near-stagnation (an index of 50.3, down from 52.4). Only very modest growth of sales was seen in Italy, which represented an improvement on falling sales seen in prior months (the index rose from 46.9 to 50.6), but was at least in part due to improved car sales resulting from recent government incentives.
The like-for-like annual rate of growth slowed sharply to near-stagnation in January, dropping further from November's 3-year survey record high of 57.0, and from 53.1 in December, to reach a 10-month low of 50.3. Higher year-on-year sales in France were offset by falling sales in both Germany and Italy, with the latter recording the steeper rate of decline.
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