Thursday, April 24, 2008

Italian Retail Sales February 2008

Ok. I have to admit, the Italian National Statistics Office are not exactly my favourite institution. The most obvious recent issue I have with them is about why they have been (still) unable to supply us with comparable data Italian GDP for the last quarter of 2007 (oh, I know, the methodological revision and all that, the one everyone else seems to have already implemented without too much difficulty. My list of beefs would be a quite a long one, and indeed I would say the only EU country statistics website with which ISTAT compares favourably would be Bulgaria (and that really is saying something), while I much prefer the site's of some EU applicatnt members like Turkey (Turkstat) or even developing world emerging economies like Chile. My latest issue is with the retail sales data, which is listed month after month over at Eurostat with a "c" (which in theory means confidential, but afaiac could be read as "we can't or we won't give you comparable data", in either case the result is most lamentable). And the reason why this is the case is reasonably evident - since ISTAT (for whatever reason) don't publish constant price data for retail sales. The data we receive are normally at current prices which means they don't allow for the impact of inflation, which means that more money may be spent but the actual volume of sales may contract. And this explains a lot.

Take the latest announcement on retail sales, as published in the Wall Street Journal:

In Italy, the national statistics office Istat said retail sales, which aren't adjusted for inflation, rose 2.7% on the year in February after a 1.0% rise in January, while month-on-month they rose a seasonally adjusted 0.3% after a 0.2% rise in January. The statistics agency said sharp rises in fuel and commodity prices were behind the rise.

Now this gives the impression that somehow or other sales are rising - by 2.7% year on year, which wouldn't be bad. Indeed if we went back over the months we would get a chart for 2006 and 2007 that looked something like this:

Which is far from dynamic, but does give the impression that there is some life left in Italian retail activity. But if we stop for a minute and think about the fact that Italian CPI inflation was running at 3.1% in February we would discover (as a rough approximation, subtracting the CPI from the non inflation adjusted sales data) that Italian retail sales actually contracted by 0.4% year on year in February, and we would get a chart going back over the last couple of years that looked something like this:

which shows the near constant contraction which has been going on in the Italian retail sector despite the increase in employment and the decline in unemployment. Looking at things this way also solves another mystery: the apparent disparity between the ISTAT retail sales data (as commented on in the economic press) and the retail sales purchasing managers index, which regularly shows sales contracting.

No comments: