Month-on-month sales at Eurozone retailers declined for a second month at the start of 2006 according to the February Bloomberg Eurozone Retail Purchasing Managers' Index, or PMI(R). The PMI is a monthly survey indicating economic conditions in the Eurozone retail sector a month ahead of government-issued figures.
Remaining below the no-change mark of 50.0 for a second successive month in February, the seasonally adjusted Eurozone Retail PMI signaled a further contraction in retail sales in the single-currency area. However, at 49.6, the rate of decline is considered marginal.
Falling month-on-month retail sales led to further downward pressure on profit margins and to more missed sales targets. Purchase price inflation accelerated and greater cost pressures led some firms to shed staff in order to control overhead.
Survey data for the three largest Eurozone economies that make up the survey revealed that Italy was the main source of falling month-on-month retail sales in February, registering a contraction for the first time in 6 months (47.1). The rate of decline in Italian retail sales was the sharpest since last June.
In contrast, German and French retail sales rose slightly during the month. German retail sales increased for the third successive month, although at a marginal rate (50.2). French retail sales grew for the second time in the past 3 months (50.7) and at a slightly sharper rate than in Germany.
Year-on-year retail sales in the Eurozone declined for the 22nd month running in February (48.4). Panelists continued to report difficult trading conditions and poor consumer attendance compared to a year ago. Anecdotal evidence suggests severe weather reduced consumer activity and led to disrupted sales efforts.
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