French retail sales in June grow rapidly for second straight month

French retailers have hinted at growth in sales in June. But on an annual basis, sales declined and were unsuccessful in meeting the plans set previously. The seasonally adjusted headline Retail PMI rose to 51 in June from 50.6 in May.

The index shows a second consecutive monthly rise in sales and at a rapid rate. Anecdotal evidence implied that the European football championships and a rise in customer football contributed largely to the higher sales, noted Markit.

However, on an annual basis, sales continued to decline. But the drop was at a subdued pace than observed in the earlier month. Actual sales continued to disappoint.

However, the extent of the latest decline was less marked than the earlier month. However, retailers continued to be positive that sales would surpass planned levels in July.

Factors expected by retailers to stimulate sales in the coming three months include loyalty scheme projects, France winning Euro 2016, positive confidence from French consumers, tourists’ arrival and summer weather conditions, added Markit. Meanwhile, economic crises, Brexit, unstable social conditions, terrorist attacks and additional taxes are likely to depress sales in the coming three months.

The value of goods ordered by retailers in France for resale dropped last month. But the contraction pace moderated. Inventories of goods for resale of French retailers dropped for the third straight month in June, but at a slower pace. Additional rise in wholesale prices was hinted by French retailers in June. But the latest increase was the weakest in four months.

Subdued price inflation helped in a less marked decline in gross margins. According to panellists, solid competitive pressures continued to act as a drag on pricing power. Meanwhile, a rise in levels of employment was recorded for the first time in six months in June, but at a marginal rate.