For the first time in three months, European retail sales declined in October as rising food and energy prices damped consumer confidence, according to Bloomberg purchasing managers index showed.
A gauge measuring retail sales fell to a seasonally adjusted 47.9 from 50.5 in September. The index is based on a survey of more than 1,000 executives compiled for Bloomberg LP by NTC Economics Ltd. A reading below 50 indicates contraction.
“Anecdotal evidence from survey panelists hinted that recent market instability and signs of a general economic slowdown had dented consumer confidence and kept some customers away from the high street,” NTC said in a statement.
“The recovery in consumer spending is just not materializing,” said Jacques Cailloux, chief euro-region economist at Royal Bank of Scotland Plc in London.
“There may be a bit more money around but higher food prices are making people cautious. They prefer to save whatever extra money they have.”
The euro dropped to $1.4399 at 12:30 p.m. in Frankfurt from $1.4418 before the report was released. The currency has gained 11 percent against the dollar since mid-January.
A gauge measuring retail sales in Germany declined to a seasonally adjusted 48.6 from 51.3 in September, NTC said today. An index of French retail sales dropped to 47.2 from 54.2, while the Italian index rose to 48 from 44.1. The three countries account for about 80 percent of euro-area retail sales by value.
Retailers “fell well short of targets” in October, NTC said, with a gauge of actual sales against planned sales dropping to 38.3 from 45.
France’s Carrefour SA, Europe’s biggest retailer, said Oct. 16 that domestic sales, which account for almost half of its overall revenue, fell 2 percent in the third quarter.
Retailers in the food and drinks sector saw the steepest price increases.
“I am not overly concerned about the increase in the savings quota; what they put aside today they can spend tomorrow,” said Hubertus Pellengahr, spokesman for the HDE German Retailers Association. “The drop in unemployment is starting to make a difference. There is money around.”
Among retailers, a gauge measuring employment rose to 51 from 50.3 in September, today’s report showed.
Metro AG, Germany’s largest retailer, reported a 10.8 percent increase in third-quarter sales from a year earlier and raised its outlook for revenue growth this year to more than 9 percent from between 8 percent and 9 percent previously. Domestic sales rose 6.9 percent, Metro said.
