Euro area retail business conditions continued to deteriorate in June, with sales, employment, purchasing of stock and margins all falling when compared with May. The Bloomberg Euro-Zone Retail Purchasing Managers' Index did however rise from 47.1 to 47.5 in June. On the other hand, the reading remained below 50.0, meaning that activity was still lower in June than in May.
So, despite reasonable consumer confidence readings, consumption in Europe remains weak. German retail sales fell for a 13th month in June as households continued to curb spending, according to the latest Bloomberg/Markit purchasing managers’ index survey. The PMI was down to 46 from 46.3 in May. Any reading below 50 signals contraction.
German retail sales have now been falling since 2006, according to data from the Federal Statistics Office.
But if you thought the German retail sales performance lacklustre, you should try using the Italian one as a benchmark. Italy saw sales drop for the twenty-eighth consecutive month in May. The retail PMI rose from 46.5 to 47.0. Well, let's be positive, this was the smallest monthly decline since October 2007. The rate of contraction has now moderated constantly since last November's record drop.
Which brings me to one of the themes I will be looking at in more depth over time: France. In my opinion it is the French economy, and not the UK one, which is currently the most robust in Europe, and the big question will be, why is this? Meantime, retail sales fell in France for the fifth successive month, but the rate of decline was only 49.4, just below the expansion mark. And the best performance this month.