Following the poor August 2017 Eurozone retail sales numbers yesterday, the September PMI’s look a whole lot better

Yesterday we saw a dreadful showing from retail sales in Aug va the collective Eurozone number. Today, we’ve had the release of the Markit retail PMI’s and they show a decent bounce back (all bar Germany);

  • Eurozone 52.3 vs 50.8 prior
  • Germany 52.8 vs 53.0 prior
  • France 53.3 vs 50.4 prior
  • Italy 50.2 vs 48.0 prior

What’s worth noting is that if we look at the Jul PMI (Eurozone) at 51.0, it fell into Aug, which was a potential signal for the drop in the headline numbers yesterday. Looking back another month, the same thing happened. Here’s how the PMI’s shape up to the headline sales;

  • June PMI rises to 53.2 vs 52.0 in May – Retail sales rise 0.6%
  • July PMI drops to 51.0 – Retail sales drop 0.3%
  • Aug PMI drops to 50.8 – Retail sales drop 0.5%
  • Sep PMI rises to 52.3 – Retail sales TBA

There’s no correlation between the size of the move in the PMI’s and the percentages in the retails but it looks like the PMI’s are a good leader of the retails, so we should remember this next month when the headline numbers for Sep come out. The market sometimes has a very short memory for this sort of thing so there might be a trade there. However, this isn’t something to put your house on as there’s never any guarantees that the correlation holds true, nor that we even get a sufficient move on the data that’s worth trading anyway. It’s something to watch though.

Ryan Littlestone

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