Here’s What the Retail Data From the Eurozone Mean
Two different reports brought mixed news about the state of the retail sector in the European Union.
Markit recently released its Purchasing Managers’ Index for retail in the eurozone for September. The average value for the region was 48.6, which is decidedly below the 50 benchmark, which would represent neither an expansion nor a contraction in the sector. Some had hoped for momentum to build after August’s value topped the 50 threshold, but they were disappointed by September’s numbers. However, the eurozone still finished the third quarter with an average value of 49.5, the highest rating for a quarter since mid-2011.
In other news, Eurostat released a report on the volume of retail trade in the eurozone during August. In support of Markit’s PMI numbers, the month was an outstanding one for retailers, posting a 0.7 percent gain from July, which itself saw a 0.5 percent increase from the previous month. The gains were mainly made in areas other than the food sector, which posted a modest decline in August. Many are now looking at Markit’s PMI report as a sign that sales for the month of September may not be as strong as some would have hoped.
Weak consumer spending is seen as a concern for the European Central Bank, Reuters reports. The bank is worried that indicators from the manufacturing and export sectors may serve to initialize a recovery, but that consumerism will have to be the driving force behind a sustainable, prolonged recovery. While concern over September’s numbers mounts, at least August’s data will let officials at the bank breathe easy for the moment.
Economists at Markit are especially worried about France’s performance in September, the report indicates. While German sales data showed a slacking rate of upturn, France’s data displayed a sharp drop, plunging the country back into the red after spending the first two months in the black for the last year and a half earlier this summer. A brighter spot in the data was Italy, which, though it still showed a contraction in the retail sector, is on track for the smallest loss in more than two years.
The pattern of some of the eurozone’s weakest economies posting surprisingly strong results continued in the Eurostat data. Spain and Portugal were two of the leaders in the growth of retail activity, with both countries gaining more than 3 percent in August. Even Slovenia, which some have pointed to as the next country that might be in need of a bank bailout, posted gains of over 3 percent.
While the news wasn’t all good, it does indicate the overall trend of recovery that has emerged from the region’s statistics over the course of the last few months. If things continue to slowly improve — and especially if gains can be witnessed in some of the eurozone’s struggling members — it is not hard to envision a scenario where the upturns can be snowballed into a full recovery.