French Retail PMI Up Slightly In July 2008

The latest Bloomberg Eurozone Retail Purchasing Managers' Index, based on a mid-month survey of economic conditions in the euro area retail sector, rose from 44.0 in June to 46.0 in July. By remaining below the 50.0 level, the index pointed to a further fall in sales during the month despite an easing in the rate of decline from the steep pace seen in June.

In contrast to Italy and Germany (where sales contracted) sales rose modestly in France, offsetting the fall seen in June. However, the rate of increase remained well down on the buoyant pace seen earlier in the year. The month-on-month sales index recovered from 48.7 to 51.3.




Of the five product categories covered by the survey, food & drink retailers reported a year-on-year increase in sales revenues in July. However, gains in annual sales in part reflected higher prices rather than improvements in volumes. For the third successive month, the steepest decline was reported for autos & fuel, as deteriorating consumer confidence hit car sales. Annual sales of pharmaceuticals were marginally lower following two months of growth. The rate of increase in prices paid for goods by retailers remained elevated in July, picking up on June to register the fourth-highest pace yet recorded by the survey. The prices index edged up to 67.3, from 67.1. Purchase price inflation hit record highs in both Germany and Italy, but eased to a ten-month low in France.


Retail sector employment fell for the fourth month running in July, with the rate of job losses unchanged on June's twenty-eight month record. The employment index held steady at 48.6. All three countries registered shrinking retail workforces, with French retailers reporting the steepest rate of decline (and posting the largest monthly fall since January 2006). In Italy, headcounts at retailers fell for the seventh consecutive month. Retail staffing levels were also trimmed in Germany, but very slightly.

French Consumer Confidence Drops To A Record Low In July

Consumer confidence in France fell to a record low in July as inflation accelerated to the fastest pace in 12 years, eroding households' purchasing power. The measure of consumer sentiment dropped to minus 48, the lowest since the index was introduced in 1987, from minus 46 in June, the Paris-based national statistics office, Insee, said in a statement today.

French Business Confidence Falls In July

French business confidence fell to the lowest in more than three years in July as record oil prices and a stronger euro dimmed the outlook for economic growth. An index of sentiment among 4,000 manufacturers dropped to 98 from 101 in June, according to Insee, the Paris-based national statistics office. That was the weakest since May 2005.



Insee's sub-index of how executives see the outlook fell to minus 34 from minus 15; a gauge of orders dropped to minus 18 from minus 13; and a measure of foreign orders slipped to minus 14 from minus 7.

Adding to signs of a slowdown, France's manufacturing and services industries shrank in July according to the latest flash reading on the Royal Bank of Scotland composite PMI for France dropped to 47, its lowest level in over 6 years. The flash estimate for France's service sector fell to 47.0 in July from 50.1 in June, according to data prepared for the RBS and released Thursday by Markit Economics.

That's the lowest reading on record and significantly below the consensus expectations of economists who had forecast a reading of 49.6. The PMI reading for the manufacturing sector was also lower than expected, falling to 47.3 in July from 49.2 in June. That's the lowest reading for five years

Europe's largest economies have been showing signs of slowing since the end of the first quarter. Business confidence fell to the lowest level in almost three years in Germany, according to the Munich-based Ifo Institute today. In Italy, business confidence slipped to its weakest since October 2001, according to the Isae Institute index.

The eurozone PMI index for the manufacturing sector fell from 49.2 points in June to 47.5 in July while its services counterpart dropped from 49.1 to 48.3. With both indicators well below the 50-mark which separates expansion from contraction, what we may have here is an unequivocal recession warning.

French Consumer Spending Falls In June

French consumer spending on manufactured goods fell in June. Household spending, which accounts for about 15 percent of the economy, fell 0.4 percent from May, when it rose a revised 1.7 percent, Insee, the national statistics office in Paris, said today.

Spending on French manufactured goods stagnated in the second quarter after expanding 0.1 percent in the first three months. Year on year, consumer spending growth slowed to 1 percent in June from a revised 2.8 percent in May. The May consumer-spending figure was revised down from a previously reported increase of 2 percent.

Spending on cars in France fell 3.8 percent in June from the previous month, and purchases of clothes and leather goods rose 0.6 percent, compared with a 4.4 percent increase in May. Spending on home appliances and furniture increased 0.8 percent.

French Industrial Output Drops In May 2008

French industrial production dropped sharply in May - by the most in almost three years, adding to the accumulating evidence of a slowdwon in the eurozone economy. The output of French factories and utilities fell 2.6 percent from April, the biggest decline October 2005, according to the nation statistics office this morning. Output, rose a revised 1.5 percent in April over March and was up 0.7% year on year.

This heavy fall in French industrial output, coming on the back of the widening trade deficit, has reinforced the impression of a fairly sharp slowdown in GDP growth in the second quarter. Manufacturing output, which excludes food and energy, was down 2.5 percent in May over April.

The French customs office reported on Wednesday a widening of the country's trade deficit to 4.738 billion euros in May, well ahead of the consensus of 4.0 billion euros, as exports fell to 34.719 billion euros from 35.313 billion the month before.

Excluding the more volatile energy and automobile components, all other components fell in in May. Consumer and intermediate goods also showed a decline if you average the data for both April and May. The car sector output, which was down 8.0 percent in May, is one of the most volatile segments, but the very sharp decline is consistent with the idea of a strong slowdown in the sector.

If we add the industrial output reading to weakening consumer spending and the poor trade balance, it seems to be consistent with a picture of stagnating GDP growth in the second quarter,and even negative GDP growth quarter on quater cannot be entirely ruled out.

French Exports Drop in May 2008

France's trade deficit widened in May to a record as the stronger euro and slowing economic growth led to a decline in exports. The deficit rose to 4.74 billion euros ($7.45 billion) from a revised 3.74 billion euros in April, the Trade Ministry in Paris said today. Exports in May fell to 34.7 billion euros from a revised 35.3 billion euros in April, with exports to the U.S. leading the decline. Imports rose to 39.5 billion euros from a revised 39.1 billion euros in April.



Europe's third-biggest economy will probably grow by 0.2 percent in the second quarter of 2008, the least in almost two years and a third of the pace in the first three months, according to the initial estimate of Paris-based statistics office Insee. The economy will stagnate in the third quarter and grow 0.2 percent in the final three months of 2008, Insee said.