Italian Retail Sales Novermber 2007

Italian retail sales declined for the ninth month this year in November as a bleaker economic outlook damped consumer demand, according to the Bloomberg retail purchasing managers index monthly survey out today. The reading has been below 50, the level that signals a contraction in sales, every month except January and February. And at 50.6 (January) and 50.4 (February) sales were barely increasing (on a seasonally adjusted basis) even then.



In fact the index of retail sales dropped to 45.3 in November, down from 48 in October, according to the survey of 440 executives compiled for Bloomberg LP by NTC Economics Ltd.

``The global outlook is darkening by the day, and Italy's low potential growth rate makes it particularly vulnerable......Risks to growth are skewed to the downside and even the chance of a recession cannot be dismissed lightly.''
Vladimir Pillonca, Morgan Stanley' Global Economic Forum Italy specialist.

Record oil prices have pushed up fuel costs, crimping household spending. Retail sales will tumble this quarter amid ``worsening economic conditions,'' the NTC report said. Crude oil prices rose to a record $99.29 a barrel on Nov. 21.

About 46 percent of retailers surveyed said they missed their sales targets last month, with 13 percent reporting they beat their expectations. A gauge of sales expectations dropped to 33.6, the lowest reading since 2005.

Twenty-seven percent of the retailers said that their margins deteriorated from the previous month, partly because of ``promotional discounts designed to stimulate demand,''. A gauge of gross margins fell to 39.0, the report said, indicating the sharpest rate of contraction this year.

(For the Bloomberg retail indicator, NTC recruits) a representative panel of retail companies in Germany, France and Italy, which together make up 80 percent of total euro-region retail sales by value. The panel includes large, chain retailers as well as smaller stores).

Italian Business Confidence November 2007

Well hot on the heels of the small rise in the German IFO business confidence index we find that in contrast the ISAE Italian business confidence index declined in November to the lowest in almost two years as the euro's gains have been acting as a curb on exports. The Isae Institute's business confidence index fell to 92.2 from a revised 92.8 in October, the Rome-based research center reported today. That is the lowest reading since December 2005.




Again, I would draw attention to Claus Vistesen's eurozone Q3 GDP conclusions:

Although the slowdown seems set to be Eurozone and indeed also EU25 wide I will be watching Italy, Greece, and Portugal in particular since these three countries are those most likely to feel the pinch longest and hardest.