Italy Retail PMI March 2008

Well there aren't too many words in my vocabulary to describe this one. Italian retail sales fell through the floor in March - at least according to the Bloomberg NTC Purchasing Managers Index - and fell at the fastest pace in four years as national elections next month added to concern about the economic outlook.

The seasonally adjusted index of retail sales declined to 36.4 from 43.8 in February, according to a survey of 440 executives compiled for Bloomberg LP by NTC Economics Ltd. That's the lowest - as the most rapid rate of contraction - since the survey began in January 2004. The reading has now been below 50, the level that signals a contraction in sales, since February 2007.




Hiring by retailers fell in March for a third month according to the survey, and purchase-price inflation accelerated for a second month to a five-month high, ``with oil-related items and foodstuffs'' leading the gains.

Elsewhere in Europe, retailers are also struggling to rekindle demand. European retail sales fell in March as sales growth slowed in Germany and France, the euro area's two largest economies, according to NTC.

For the Bloomberg retail indicator, NTC compiled 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.

On another front there are some signs that the coming elections may not produce the kind of decisive outcome many Italians were hoping for, at least according to this story in ANSA.

At the end of his post on the fall of the Prodi government my colleague Manuel Alvarez noted that "[...] it's quite possible that Italy will head to the polls later this year under the existing electoral system - with its well-known shortcomings - and that the government that emerges from that election may eventually find itself in a predicament similar to that of Prodi's outgoing cabinet."

Well this is precisely what seems to have happened, at least according to the ANSA report. As Manuel noted in a mail to me this morning:

"Of course, if that happens, Silvio Berlusconi will have no one to blame but himself: he wanted an early election under the current system, and he got it - but once again, his scheme may not entirely work out the way he expected. We shall see..."