The Bloomberg Eurozone PMI, 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, registered 53.1 in May, suggesting a significant bounce-back from April's survey low of 41.8. The improvement reflected higher sales of clothing & footwear, food & drink and household goods, commonly attributed to better weather compared to April and to the timing of Easter.
However, despite the pick-up during May, sales have fallen over the first five months of the year on average, suggesting that business conditions in the Eurozone retail sector are generally subdued. Also, due to the very early timing of easter this year, and some very untypical weather, it is hard to interpret the month on month readings. If we add the two readings - April and May - together, and halve the result, we get 47.45, which means on average there was contraction across both months.
In May sales rose in Germany and France but fell in Italy. In fact the data from Italy continue to make decidedly depressing reading since Italian retail sales fell for the fifteenth successive month. Although the rate of decline slowed from April's record pace (the index rose from 31.4 to 38.8), the last three months have seen the three sharpest falls in sales seen over the survey's four-and-a-half year history. Consumers remained reluctant to spend due to squeezed incomes and concerns over the economic and political environment. I think the chart below gives a quite exceptional image of the state of play in terms of domestic consumer demand in Italy. Horrible!
