France’s retail sales rise in August at fastest rate in nearly five years

Retailers in France hinted at a rise in sales for the fourth consecutive month in August. The pace of expansion accelerated, reaching the most rapid pace since October 2011. The seasonally adjusted headline retail PMI came in at 53 in August, a rise from July’s 51.6. On an annual basis, sales were higher in August, the first time since July 2015.

Actual sales disappointed again in relation to retailers’ earlier set plans in August. But the degree of the recent shortfall against targets was the least noticeable in more than one year. Furthermore, positivity regarding the one-month outlook for sales rebounded to the highest level since May.

Factors anticipated by retailers to stimulate sales in the months ahead include promotional activities, marketing campaigns, the launch of new products and the back-to-back school period, stated Markit Economics. Factors expected by retailers to probably depress sales in the coming three months include terrorist attacks, challenging social climate, weak consumer confidence, strong competitive pressures and high unemployment.

Even if French retailers’ gross margins dropped further in August, the pace of decline was moderate and the slowest since January 2011. A subdued increase in wholesale prices helped soften pressure on margins. Meanwhile the stocks of goods for resale held by French retailers rose for the second straight month in August. Furthermore the pace of growth accelerated to one-year high, despite a more rapid fall in the value of goods ordered by retailers. French retail sector’s employment rose for the third straight month in August.