German retail PMI eases in June as sales drop on missing target deadline

Germany’s retail sector Purchasing Managers’ Index (PMI) eased in June, signaling a weak pace of expansion. However, a whiff of positivity was injected by the European Football Championship and the accompanying promotional offers that prevented the PMI from a steeper decline .

The headline seasonally adjusted Germany retail PMI which measures month-on-month changes in sales on a like-for-like basis softened to 51.6 in June, from 54.0 in May. Sales growth also slowed slightly when measured on an annual basis. However, the rate of increase remained well above the long-run series average, with over 44 percent of the survey panel reporting an expansion.

Moreover, sales in June were generally lower than previously anticipated, according to latest survey results. It was the first time in three months that sales targets were missed, Markit reported.

"Although the Retail PMI signalled a further rise in sales, the rate of growth was fairly uninspiring and at least part of the increase was driven by the European Football Championships," said Oliver Kolodseike, Economist, Markit.

However, even as purchasing rose at a slower pace during June, inventories accumulated to the greatest extent since last September, as some companies placed their purchases directly into stock. Meanwhile, gross operating margins rose for the second month running in June. Although the rate of increase was only fractional overall, it was the first back-to-back increase in margins in the survey’s history, the report mentioned.