A steep decline in retail sales in Italy – a nation normally renown for its love of shopping and fashion – has pushed the eurozone’s retail sector back into contraction territory, according to a survey of activity.
Markit’s purchasing managers’ index for Italy’s retail sector slumped to a 31-month low for June, dragging an index covering the euro area as a whole to a two-month low and back into negative territory.
The eurozone retail PMI came in at 48.5 for June, down from 50.6 in May. Any reading below 50 points to contraction.
Markit said sales in Italy – which is fighting to stave off a crisis in its banking sector – have now fallen for six straight months.
Italy’s prime minister Matteo Renzi has said he is willing to defy EU rules and pump billions of euros into the country’s banking system if it comes under severe distress. Italian banking stocks have come under renewed pressure after Britain’s vote to leave the EU, which has added to existing concerns over capital and bad loans in the sector.
Phil Smith, economist at Markit said:
The biggest talking point will be Italy’s sharp drop in sales, which contrasted with upturns across both France and Germany. Clearly consumer spending is on the wane in the eurozone’s third-largest economy after recent tentative signs of recovery. But it was a brighter picture for retailers in France, where back-to-back increases in sales were recorded for the first time in two years and employment edged higher. Germany remained the best performer overall, although sales growth there eased from the solid pace seen in May.