BoF Retail Survey Reveals That Sales Weaken Further

The Bank of France retail survey fell by 3.7% in October showing a significant decline in sales volumes in the month. The decline interrupts a two-month string of sales volumes rising as volumes rose by 0.2% in August and by 2.5% in September.

Across the seven product categories for the month, all of them decline in addition to a decline in all industrial goods sales volume and then overall volume. October was a bad month for French consumers. Food purchases fell by 3.3% in October following declines in three of the four most recent months. Industrial goods sales volumes declined 3.9%, which is only their first to decline in the last three months but the third decline in the last five months.

Among other selected nonfood categories, textile sales volumes fell by 6.1% in October, footwear sales volumes fell by 8.2%, furniture volumes fell by 2.9%, household appliances saw sales volumes fall by 2.5%, electronics volumes fell by 7%, and new auto purchases fell by 9%. The declines across the various categories are relatively large declines for a single month.

According to sequential change calculations, sales volume changes over three months, six months and 12 months show declines in volume for overall sales on all three horizons but not a worsening trend. Total sales volumes fall by 5.4% over 12 months; that worsens to an 8.2% rate of decline over six months, but then the decline slows to a 4.4% decline over three months. Well, that's not a progressive worsening, but a 4.4% decline over three months is certainly not a walk in the park for real sales.

Food purchases are disturbingly weak Sequentially food purchases are weakening and weakening progressively. Food purchases fall by 7.9% over 12 months, decline at an 8.9% annual rate over six months and then fall at a 12.7% annual rate over three months. Such a progression for food, the most obvious consumer staple item, is certainly vexing. Food prices have been among some of the strongest rising and most persistent showing increases globally with the combination of international supply problems, drought, interruptions due to the war in Ukraine, and the lack of availability of fertilizer to help stimulate agricultural production. Food prices have been rising relentlessly globally.

Industrial goods sales For the category 'all industrial goods' the 12-month decline logged a -3.8% pace, the six-month decline is at a -8.3% annual rate, but over three months there's an increase in the growth of sales of 0.8% annualized. That's not much of an increase, but it does interrupt the string of negative numbers. Looking across the six nonfood categories over three months, there are declines in only two categories: household appliances and new auto sales. Household appliances show declines on all horizons at a pace that is somewhat unsettling although not a clear progressive deterioration. Household appliance sales fall 10% over 12 months and fall at a 7.6% annual rate over six months, but then they return to an even faster decline at 10.5% over months. Auto sales are somewhat more mixed with a 9.2% decline over 12 months, a 5.8% increase over six months and a decline at only a 0.4% annual rate over three months.

Other categories in the nonfood retail area show annual rate increases in sales over three months such as the 10.6% annual rate increase in textile sales, the 9.9% annual increase in electronics, the 1.6% increase in footwear sales, and the 0.8% increase in furniture sales. However, textiles and footwear show declines over six months and over 12 months and declines that are relatively steep. Only furniture sales and electronic sales show any progression that seems to have any life to it.

Sales growth rate rankings are low The ranking of the year-over-year sales figures shows abject weakness across all the categories. A ranking above the 50th percentile represents a growth rate in sales volumes that is more than its median increase. There are no such increases for any category as of October. In fact, the strongest year-over-year increase is from furniture sales with a 31.6 percentile standing, followed by a 21.1 percentile standing for new auto sales, a 20.6 percentile standing for electronics, an 18.7 percentile standing for footwear and an 18.2 percentile standing for textiles. The weakest category is household appliances with only a 6.7 percentile standing for its 12-month growth rate. For all industrial goods, the sales volume standing is in its 16.7 percentile. For food, the percentile standing is the weakest on this ranking. The data in the table are ranked over a period since June 2005. The food ranking therefore is the weakest ranking in year-over-year food volume sales in the last 17 years, an extremely significant development, especially recognizing that over that span there's been population growth.

Summing up... The data on French retail sales show a great deal of weakness. While there are a few commodity categories with some recent increases in sales, overall the year-over-year numbers are so weak; nothing is very impressive. The chart at the top shows that since COVID hit, sales have become extremely volatile and recently quite weak compared to history where the percentage changes for these categories tended to be confined to relatively small percent changes on a year-over-year basis. That is no longer the case. Of course, inflation continues to be a big problem in France and in the European Monetary Union. The European Central Bank continues to pursue policies to curtail inflation that are also going to have an adverse impact on growth. There are looming energy problems with winter having arrived. For France and all the EMU, energy will be an issue although France with its greater reliance on nuclear power will be more insulated from this than other countries. Still, there is a war going on in Ukraine and there's always the potential for further fallout from that. The outlook remains decidedly guarded.