Bloomberg PMI Signals Euro Retail Sales Fall at Weaker Rate

Retailers Wind Down Stocks and Staff Levels

Wholesale Prices Show Smallest Rise for over Three Years

NEW YORK, March 30 /PRNewswire/ -- The Bloomberg Euro-Zone Retail Purchasing
Managers' Index ("PMI(R)"), based on a mid-month survey of more than 1,000
executives in the euro area retail sector, provides data one month ahead of
government-issued figures. The PMI rose from 42.3 in February to 44.1 in
March, signaling the smallest monthly drop in the value of sales in five
months. The first quarter has seen an average monthly decline that was less
steep than the record drop seen during Q4 of last year. The March decline
remained strong by the survey's historical standards, and sales have now
fallen for ten consecutive months.

When compared to February, sales again fell in each of the three largest euro
countries:
-- Italy saw the steepest overall fall in sales, but the month-on-month
sales index rose from 38.2 to 41.9, indicating an easing in the rate
of
decline. The monthly drop in sales was the smallest for six months,
having eased markedly in recent months following November's record
fall. Sales have fallen in each of the past 25 months in Italy.
-- France also saw a moderation in the rate of sales decline, with the
pace
easing from February's record but remaining steep. The
month-on-month index rose from 42.6 to 45.7, rounding off a first
quarter that has seen the weakest sales performance in the history of
the survey. French retailers have reported falling sales in five of
the
past six months.

-- Germany was the only one of the three countries to report a steeper
drop
in sales than in February, though the rate of decline remained less
marked than those recorded in the three months to January. The
month-on-month index for Germany fell from February's four-month
high of 45.4 to 44.4. Sales in Germany have now fallen for ten
successive months.

The March survey also showed that euro area retail sales remained well below a
year ago on a like-for-like basis. The year-on-year sales index edged up from
35.5 in February to 36.4, remaining below the 50.0 no-change level to register
the fourth-steepest annual decline since the survey began in January 2004.

Sales by sector - all sectors reported falling sales; autos saw smallest
decline
Sales fell compared to one year earlier across all five product categories in
March. The steepest fall was seen for clothing & footwear - where sales
contracted at the fastest annual rate for eleven months - followed by
pharmaceuticals (which saw a record drop). Food & drink retailers also posted
a faster yearly rate of sales decline, posting the second steepest fall in the
survey history. Annual rates of decline eased in both household goods and
autos & fuel, with the latter showing the weakest fall for ten months and the
smallest of all sales categories. This partly reflected a boost from
government incentives.

Sales against plans - sales continued to disappoint relative to targets
The sales against targets index rose from 35.1 to 36.9, staying well below the
50.0 neutral level to indicate that sales objectives were again missed by a
wide margin. Targets proved to be too optimistic in all three countries,
albeit to lesser extents than in February. Italy again reported the largest
shortfall and Germany the smallest.

Sales sank below targets in all main product sectors, and were missed to the
greatest extent in clothing & footwear. Car scrapping incentives enabled auto
retailers to report the smallest shortfall of all product categories for the
second month running.

Expected sales next month - confidence at six-month high
Expectations for beating targets in the coming month rose to a six-month high
in March. The respective index rose from 50.1 to 55.8. Confidence has improved
in France - where forecasts for sales are the highest for eleven months - and
Germany, while Italian retailers' expectations are neutral. Retailers of food
& drink and autos & fuel are again the most confident about hitting targets,
while household goods is the only category for which targets are expected to
be missed.

Prices and margins - price pressures weakest for 3 1/2 years
Prices paid for goods by retailers showed the smallest monthly rise since
August 2005. With the exception of an uptick in January, the rate of increase
has fallen steadily since the middle of last year as weaker demand, lower
commodity prices and competition among suppliers has softened inflationary
pressures. The prices index dropped from 53.9 to 53.0 in March. Cost inflation
moderated in Germany and France, and prices fell in Italy for the first time
in the survey's history.

Gross margins at euro-zone retailers continued to worsen in March, but the
rate of deterioration eased for the third successive month from December's
record to show the smallest decline since last September. The margins index
rose from 39.9 to 40.5. Of the three countries, Italian retailers again
reported the greatest weakening of margins (despite seeing the smallest
deterioration for eight months) while German firms reported the weakest
decline.

Employment - rate of job losses at five-year high
Euro area retailers cut their employment levels at the fastest rate since
February 2004, reducing staff numbers for the twelfth successive month. The
employment index slipped from 47.4 to 46.7 in March as the rate of job losses
gathered pace in all three countries covered by the survey. Italian retailers
reported the largest employment cut (the third-highest on record), followed by
France. German retailers reported the most marked acceleration in the rate of
job losses compared to February, seeing payrolls fall at the fastest pace
since February 2007.

Retailers' buying and stock trends - stock levels in record fall
Retailers' stocks of unsold goods fell for the seventh consecutive month in
March, dropping at the fastest rate in the survey's five-year history to set a
new record for the third month running. The stocks index registered 45.7, from
46.9 in February, reflecting record falls in stocks in Italy and France and a
further drop in German retail inventories.

The stock run-down was largely deliberate, as retailers sought to reduce
overheads and keep inventories as low as possible in the face of subdued high
street demand. The value of goods purchased for resale by euro area retailers
fell sharply again in March, albeit to a lesser degree than the record fall
seen in February. The buying index rose from 40.3 to 43.4.

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Kristin Swenson of Bloomberg LP, +1-212-617-4264, or kswenson@bloomberg.net