Courtesy of Mish.
Is the worst over for the Eurozone? That’s what the ECB and heads of state said at the recent economic summit in Davos.
I offer some economic reality.
Eurozone Sales Collapse 15th Month and Wholesale Prices Soar
The Markit Eurozone Retail PMI® shows Eurozone retail sales downturn extends to fifteenth month in January
Key points:
- Rate of decline remains sharp despite easing since December
- Sales growth resumes in Germany
- Wholesale prices rise at fastest rate in ten months
Summary
Markit’s Eurozone retail PMI® data for the opening month of 2013 signalled a fifteenth consecutive month-on-month decline in sales values, even after accounting for the post-festive slump in trading and a resumption of growth among German retailers.
The three largest Eurozone economies are covered by the retail PMI surveys. The German Retail PMI hit a seven-month high and rose above 50.0, signalling a return to growth following December’s contraction. French retailers meanwhile saw another solid fall in sales at a rate broadly similar to that seen in the final month of 2012 (adjusted for seasonal influences). French retail sales have declined for a survey-record ten successive months. In Italy, retail sales fell for the twenty-third consecutive month, and the rate of decline remained severe despite easing since December.
The rate of wholesale price inflation accelerated further in January to reach a ten-month high, linked to suppliers passing on higher raw material costs. All areas of retail posted rapid increases in suppliers’ prices except for clothing & footwear. Despite this, the value of retailers’ new purchases fell sharply, as they aimed to minimise warehouse levels in the face of weak demand. Subsequently, the value of goods held in stock at retailers declined for the fifth month running, and at the fastest rate since August 2010. Pressure on retailers’ gross margins remained intense, however, most notably in Italy.
The combination of falling sales, rising cost pressures and a margin squeeze resulted in a
further round of job cuts at Eurozone retailers, even after accounting for the usual post-festive reductions. Employment in the sector has fallen every month since April 2012, and the rate of decline accelerated to the fastest since last July. German retailers again bucked the trend, registering sustained workforce growth.
Italy Retail Sales Drop 23rd Month
The Markit Italy Retail PMI® shows further sharp drop in retail sales, despite reaching four-month high
Key points:
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