The Bloomberg Eurozone Retail Purchasing Managers' Index, an indicator based on a mid-month survey of economic conditions in the euro area retail sector and providing data one month ahead of government issued figures, fell a record 6.4 points from 48.2in March to a survey low of 41.8 in April. This signals the steepest monthly decline in sales since data were first collected in January 2004.
Retailers blamed a combination of bad weather, the timing of Easter, poor consumer confidence, squeezed household budgets due to rising food and energy prices for the steep drop in sales at the start of the second quarter. In Italy, ongoing political uncertainty was an additional factor cited by retailers.
French retail sales showed the weakest decline of the three countries; nevertheless sales fell at the fastest monthly rate since January 2006 (the index slumped from 53.3 to 46.2). The April fall contrasted with robust increases in sales over the first quarter.
The combination of rising non-staff costs and weak sales caused employment in the Eurozone retail sector to fall marginally in April, following marginal gains in the first three months of the year (the index fell from 50.1 to 49.5). A slight rise in French retail employment was countered by a small decline in Germany and a larger fall in Italy, where the rate of job losses in the past two months has been higher than at any time since late 2004.
The fastest inflation since 1996 is eroding demand at a time when the economy is already slowing. The European Commission yesterday forecast growth of 1.6 percent this year after 1.9 percent in 2007.
Consumer confidence in France dropped to a record low in April, Insee, the national statistics agency, reported today. The measure of consumer sentiment fell to minus 37, the lowest since the index was introduced in 1987, from minus 36 in March.
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