Euro Area Retail PMI shows Marginal Sales Rise

Retail sales increased in the euro area during May, bouncing back from a reduction in activity over the previous two months, according to the latest Purchasing Manager’s Index (PMI), compiled by Markit.
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The PMI index reached 50.6, above the neutral rate of 50, and was the highest rate recorded for seven months for the retail sector.

May’s retail growth in then euro area was led by Germany, where growth was solid and at a faster pace than the previous month.

Sales also rose in France for the first time in seven months, but only at a slender rate the respondents to the survey said, although year on year, French sales were lower.

These rises were offset in the whole of the euro area, by a fall of sales in Italy, even though the fall in sales for May was slower than in recent months, it further cemented what has been a downwards trend since the start of this year.

There was a general disappointment from sector managers, as the survey revealed that retail business had been poor relative to the targets that the industry set.

This also reflected that the retail industry in France an Italy had underperformed.

The strength of confidence towards future sales prospects was nevertheless at a three-month high.

Employment in the retail industry climbed upwards for the seventh month running, even though there was only a slight increase in the amount of new positions created.

Hiring increased in Germany as business grew, but that was countered by lay offs in the sector in both France and Italy.

Cost inflation in the industry also rose, and overall the fastest rate of this was found in Germany, and then followed by France.

This resulted in downward pressures being placed on retailers’ gross operating margins, although Germany bucked that trend as they posted a rise in gross margins for the first time since November 2010.

German Manufacturing Orders Decrease by 2% in April  

Official figures have revealed a below par amount of business in the manufacturing industry during April, with a 2% reduction compared to the previous month.

The data was even more disappointing, as in March there was an upswing or 2.6% in manufacturing, in contrast to February.

In April, domestic orders increased 1.3%, while foreign orders decreased by 4.3%.

New orders from the euro area were up 2.5% on the previous month, while new orders from other countries decreased by a significant 8.3% compared to March.

The manufacturers of intermediate goods rose 4.8% for April, while the manufacturers of capital goods showed decreases of 6.1% on the previous month.

For consumer goods, a decrease in new orders of 1% was also found.

Pound Falls As Fears over ‘Brexit’ Increase  

The UK pound has begun the day GMT by sliding down against the US dollar, and the GBP/USD rate is currently $1.43, yesterday the pound reached just over $1.45.

This morning, polling company You Gov revealed in their latest survey, that more respondents favoured an exit from the European Union, with 45% saying that wanted to leave compared to 41% who want to remain.

The uncertainty that would erupt from an EU exit, would leave the pound in a precarious position in the eyes of traders.