The February Bloomberg Eurozone Retail Purchasing Managers' Index, or PMI(R), an indicator based on a mid-month survey of economic conditions in the euro area retail sector, signaled near-stagnation in retail sales.
At 49.8, below the critical no-change level of 50, the indicator signaled a very marginal drop in sales and represents an improvement on the marked fall in sales in January, when the PMI hit a 23-month low of 47.9.
But the marginal fall in month-on-month sales masked large variations in performance by country:
- Germany: Sales fell sharply in Germany for the second successive month following the strong growth seen in late 2006. The drop is attributed primarily to the ongoing impact of January's increase in sales tax. In a sign that the impact of the VAT rise is fading, the February drop was less steep than January's (an index of 45.0, up from 43.9).
- Italy: Only very modest growth of sales was again seen in Italy, with the index falling from 50.6 to 50.4. Consumers remained cautious in the face of political and economic uncertainty. However, the recent modest growth is an improvement over sales declines seen in late 2006.
- France: Sales growth picked up markedly in France, accelerating for the first time in 4 months to hit a 4-month high and showing the strongest growth of the three countries for the first time since last October (the index rose from 50.3 in January to 54.7). Sales were higher compared with the same month 1 year ago, the year-on-year index rising from January's 10-month low of 50.3 to 53.2.
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