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Thursday, December 19, 2024

France Economic Implosion Underway; French Retail Sales Contract 9th Consecutive Month as Cost Inflation Surges

Courtesy of Mish.

Inquiring minds are noting the expected (at least in this corner) collapse in European retail sales as measured by PMI indices.

The spotlight for this post is France, the second largest Eurozone economy following Germany.

The Markit France Retail PMI® shows French retail sales fall for ninth consecutive month.

Key points:

  • Sales fall at sharper pace on both monthly and annual measures
  • Purchasing costs rise at strongest rate in ten months
  • Stocks of goods for resale decline at faster pace

Summary:

French retailers reported another month-on-month decline in sales during December – the ninth in succession which is a survey record. Sales were also down on an annual basis, and fell well short of retailers’ plans. Gross margins remained under considerable pressure, partly reflecting a strong and accelerated rise in purchasing costs.

The headline Retail PMI® slipped to 46.8 in December, from 48.8 in November. The latest reading was indicative of a solid rate of contraction. Anecdotal evidence suggested that a difficult economic climate and low customer footfall had contributed to the drop in sales.

Actual sales at French retailers once again disappointed relative to previously set plans in December. The degree of undershoot was the greatest since August. Survey respondents are also pessimistic regarding the one-month outlook for sales.

Factors expected by retailers to boost sales over the coming three months include cold weather, new product launches and promotions. Those factors expected to depress sales include a weak economy, depressed consumer confidence and increased taxes.

Latest data indicated that French retailers’ gross margins remained under strong pressure in December. Margins have declined in every month since February 2008.

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