Download Macro Scorecard for Largest European Economies

GLOBAL MACROECONOMIC SCORECARD:
THE LARGEST EUROPEAN ECONOMIES
Presented by:
Doug Hermanson
Economist
March 2013
Current Retail Conditions
Broad-based economic declines in the largest countries
• Consumer spend
Summary of Macro Factors Affecting Retail*
is weak but
Q4 2012 or Latest Available Month*
positive in France,
Major European Countries
Country
Germany, and
France Germany Italy Spain
UK
Indicators
U.K.
GDP, Annualized Growth Rate*
Residential & Business Investment*
• Except for food in
Consumer Spending*
U.K., low inflation
Retail Sales
is propping up unitConsumer Confidence
CPI Headline Index
demand—but
CPI Food Index
inflation may loom
CPI Core Index
with easy money,
█ = IMPROVING █ = MIXED █ = WORSENING
weak currency
• Spain, Italy wilting
under austerity
2
* GDP, Investment and Consumer Spending are quarterly through fourth quarter of 2012; Remaining
indicators are monthly through December, January, or February 2013
Source: EuroStat, UK National Statistics, Spain National Institute of Statistics and Kantar Retail
© Copyright 2013 Kantar Retail
2
The Macro Outlook for Retailing in Europe
Recession, stagnant growth may persist beyond 2013
• Recessionary
environment most
severe in Italy and
Spain, but marked
growth absent in all
Europe’s major
economies
• A contraction in
Germany and France is
an ominous sign, given
their key euro zone role
• United Kingdom faces
stagnant growth
Source: Kantar Retail
Short Term
(6–12 months)
Long Term
(2–5 years)
Growth will be flat-toFrance negative for economy
Long-term growth weak
unless creates better
business environment
Faces spotty growth and
At risk of persisting weak
growth given toll of key role
Germany recession threat, given
weak exports to neighbors in support of euro zone
Declines likely to worsen
Faces stagnant growth
unless cuts public sector,
Italy given political stalemate
adds pro-growth initiatives
Continued recession as
Slow-evolving austerity
measures likely to result in
Spain government cuts remain
sharp
persisting stagnant growth
Flat-to-negative growth due With austerity measures
United to austerity measures; easy extended through 2018,
Kingdom monetary policy may ignite growth is likely to remain
inflation pressures
weak to modest
Recession with uncertain
Growth will be tempered by
Net
path toward growth
persisting austerity and
Outlook
slow pro-growth reforms
© Copyright 2013 Kantar Retail
3
Summary Conclusions and Implications
• Short vs. Long Term. Expect continued contraction in most of
the euro-zone economies in the coming quarters. Renewed
growth hinges on a more credible plan for the euro crisis.
• Prices/Costs. Plan on global cost pressures that remain
relatively modest for most markets in 2013 as a result of
moderate global demand growth in the short term.
• Europe. Plan for growth across euro-zone countries that is flat
or falling in the worst cases through 2013, if not longer
• Expect Italy and Spain’s path toward growth to be uncertain and even
unlikely by 2015 without a more credible plan for the euro crisis
• Do not expect Germany to bounce back to healthy growth in 2013
• Look for France to become a bigger drag on the region
• Expect the United Kingdom to continue to flirt with recession as it tries to
cushion austerity with easy monetary policy; risking further acceleration
in inflation
© Copyright 2013 Kantar Retail
4
European Markets: Economies Contracting
Broad-based declines, led downward by Italy and Spain
• Renewed declines
in U.K. and in
France in Q4
• Matching worst
decline since 2009
in Italy and Spain
• Most worrisome
is declining growth
in Germany, which
has been
Europe’s growth
engine
Source: EuroStat and Kantar Retail
European Economies: Inflation-Adjusted GDP
Qtr-to-Qtr Growth, Seasonally-Adjusted Annualized Rate
2012.2
2012.3
2012.4
3.9%
1.1% 0.9%
0.6%
-0.4%
-1.1%-1.4%
-2.3%
Germany
-0.8%
-1.0%
-3.0%
France
United
Kingdom
-1.5%-1.3%
-3.7%
Italy
-3.1%
Spain
© Copyright 2013 Kantar Retail
5
European Markets: Distinct Retail Sales Trends
Steepening declines in Spain, Italy; Others hold at weak pace
• Germany retail
sales regained
some ground
• Stronger shopper
pullback in Spain
and Italy
• Elevated inflation
contributes to
relatively stronger
growth in U.K.
• France holding at
a weak pace
European Economies: Nominal Retail Sales
Year-to-Year Percent Change; Not Adjusted for Inflation
6%
5%
4%
3%
2%
1%
0%
-1%Mar-11
-2%
-3%
-4%
-5%
-6%
-7%
-8%
United
Kingdom
France
Germany
Mar-12
Italy
Spain
* Through February, except Italy is through December and German/France through Jan.
© Copyright 2013 Kantar Retail
Source: EuroStat, Japan National Statistics Center, National Bureau of Statistics of China, U.S. Department of Labor
6
European Markets: Price Inflation Mostly Easing
Elevated inflation in Spain and U.K. is a concern
• Elevated inflation
in Spain and U.K.
means that their
retail sales are
even weaker in
unit volume terms
European Economies: Consumer Price Inflation
Year-to-Year Percent Change, Through February
6%
5%
United Kingdom
Italy
4%
3%
2%
Germany
1%
• Unit demand
0%
Mar-11
helped by price
-1%
letup in France,
-2%
Italy, and Germany -3%
• Inflation may loom
with easy money,
weak currency
Spain
France
Mar-12
-4%
-5%
© Copyright 2013 Kantar Retail
Source: EuroStat, Japan National Statistics Center, National Bureau of Statistics of China, U.S. Department of Labor
7
European Markets: Core Price Pressure Mixed
Excluding food/fuel, pressures most notable in Spain, U.K.
• U.K. and Spain
core inflation
leveling off but still
elevated
• Core price
pressures mixed
in Germany, Italy
• France on a clear
easing trend since
mid-2012
European Economies: Consumer Price Inflation
Year-to-Year Percent Change, Through February
6%
5%
4%
3%
Italy
United
Kingdom
Spain
2%
1%
0%
Mar-11
-1%
Germany
France
Mar-12
-2%
-3%
-4%
-5%
© Copyright 2013 Kantar Retail
Source: EuroStat, Japan National Statistics Center, National Bureau of Statistics of China, U.S. Department of Labor
8
European Markets: Confidence Metrics Diverge
Germany somewhat less negative in consumer outlook ...
• … as confidence
improves some
• France and Italy
holding at very
weak levels
• Confidence has
downshifted in
Spain in past year
• U.K. confidence
has shown some
resilience in face
of austerity
European Economies: Consumer Confidence
Indices Through November
15
5
-5Mar-11
-15
-25
-35
-45
Mar-12
Germany
United
Kingdom
Spain
France
Italy
-55
© Copyright 2013 Kantar Retail
Source: EuroStat, Japan National Statistics Center, National Bureau of Statistics of China, U.S. Department of Labor
9
Current Retail Conditions: France, Germany, U.K.
Largest European Economies: Selected Indicators
• Consumer spending is
weak but positive in
France, Germany and
U.K.
1
• Easing inflation is
propping up unitdemand in these
countries; food in U.K
an exception
• Declining investment
an ominous sign for
their job markets
1 A three-month moving average is used to smooth out
volatility in consumer confidence and retail sales
Q4 2012 or Latest Available Month
█ = IMPROVING █ = MIXED █ = WORSENING
United Kingdom
2
GDP (Inflation-Adjusted), Annualized Growth Rate
Residential & Business Investment (Inflation-Adjusted)
Consumer Spending (Inflation-Adjusted)
Retail Sales Excluding Auto & Fuel Channels 1
Consumer Confidence (Points) 1
CPI Headline Index, Not Seasonally Adjusted (NSA)
CPI Food Index, Not Seasonally Adjusted (NSA)
CPI Core Index, excluding food and fuel (NSA)
Period
Y-to-Y
Q4 '12
Q4 '12
Q4 '12
Feb-13
Feb-13
Jan-13
Jan-13
Jan-13
0.3%
1.7%
1.3%
2.2%
6.8
2.7%
5.4%
2.1%
Period
Y-to-Y
Q4 '12
Q4 '12
Q4 '12
Jan-13
Feb-13
Feb-13
Feb-13
Feb-13
0.4%
-3.9%
0.4%
1.5%
-7.2
1.8%
2.5%
1.3%
Period
Y-to-Y
Q4 '12
Q4 '12
Q4 '12
Jan-13
Feb-13
Feb-13
Feb-13
Feb-13
-0.3%
-2.2%
0.4%
1.2%
0.0
1.2%
2.2%
0.7%
Germany
GDP (Inflation-Adjusted), Annualized Growth Rate
Residential & Business Investment (Inflation-Adjusted)
Consumer Spending (Inflation-Adjusted)
Retail Sales Excluding Auto & Fuel Channels 1
Consumer Confidence (Points) 1
CPI Headline Index, Not Seasonally Adjusted (NSA)
CPI Food Index, Not Seasonally Adjusted (NSA)
CPI Core Index, excluding food and fuel (NSA)
France
GDP (Inflation-Adjusted), Annualized Growth Rate
Residential & Business Investment (Inflation-Adjusted)
Consumer Spending (Inflation-Adjusted)
Retail Sales Excluding Auto & Fuel Channels 1
Consumer Confidence (Points) 1
CPI Headline Index, Not Seasonally Adjusted (NSA)
CPI Food Index, Not Seasonally Adjusted (NSA)
CPI Core Index, excluding food and fuel (NSA)
Source: EuroStat, UK National Statistics, Spain National Institute of Statistics and Kantar Retail
Growth
Q-to-Q or Chg Chg Q-to-Q
M-to-M Y-to-Y or M-to-M
-1.0%
0.0%
-4.9%
-1.4%
0.1%
0.9%
0.5%
-0.1%
-0.1%
0.4%
0.3%
0.4%
1.8
2.1
1.0
-0.5%
0.0%
-1.0%
1.3%
1.1%
0.7%
-0.9%
-0.2%
-1.0%
Growth
Q-to-Q or Chg Chg Q-to-Q
M-to-M Y-to-Y or M-to-M
-2.3%
-0.5%
-3.3%
-2.8%
-1.5%
-1.4%
0.3%
0.4%
0.3%
0.8%
1.1%
1.6%
0.6
0.1
0.6
0.8%
-0.1%
1.5%
0.0%
-1.1%
-0.6%
0.8%
0.2%
2.3%
Growth
Q-to-Q or Chg Chg Q-to-Q
M-to-M Y-to-Y or M-to-M
-1.1%
-0.3%
-1.7%
-4.0%
-2.4%
-2.1%
0.8%
0.3%
-0.3%
0.0%
0.0%
0.1%
0.6
0.6
0.5
0.3%
-0.2%
0.9%
0.1%
-0.4%
0.1%
0.2%
-0.1%
1.3%
© Copyright 2013 Kantar Retail
10
Current Retail Conditions: Italy, Spain
Largest European Economies: Selected Indicators
• One positive sign is
inflation trends in Italy
1
• Otherwise, the
indicators are
overwhelmingly
negative for both
countries
• Consumer demand in
Spain further hurt by
elevated inflation in
addition to escalating
unemployment
Q4 2012 or Latest Available Month
█ = IMPROVING █ = MIXED █ = WORSENING
Spain
2
GDP (Inflation-Adjusted), Annualized Growth Rate
Residential & Business Investment (Inflation-Adjusted)
Consumer Spending (Inflation-Adjusted)
Retail Sales Excluding Auto & Fuel Channels 1
Consumer Confidence (Points) 1
CPI Headline Index, Not Seasonally Adjusted (NSA)
CPI Food Index, Not Seasonally Adjusted (NSA)
CPI Core Index, excluding food and fuel (NSA)
Period
Y-to-Y
Q4 '12
Q4 '12
Q4 '12
Dec-12
Feb-13
Feb-13
Feb-13
Feb-13
-1.9%
-10.3%
-3.0%
-6.4%
-21.1
2.9%
3.5%
2.1%
Period
Y-to-Y
Q4 '12
Q4 '12
Q4 '12
Dec-12
Feb-13
Feb-13
Feb-13
Feb-13
-2.8%
-7.6%
-4.4%
-2.9%
-6.1
2.0%
2.3%
1.4%
Italy
GDP (Inflation-Adjusted), Annualized Growth Rate*
Residential & Business Investment (Inflation-Adjusted)
Consumer Spending (Inflation-Adjusted)
Retail Sales Excluding Auto & Fuel Channels 1
Consumer Confidence (Points) 1
CPI Headline Index, Not Seasonally Adjusted (NSA)
CPI Food Index, Not Seasonally Adjusted (NSA)
CPI Core Index, excluding food and fuel (NSA)
Growth
Q-to-Q or Chg Chg Q-to-Q
M-to-M Y-to-Y or M-to-M
-3.1%
-0.3%
-1.8%
-14.5% -0.6%
-9.6%
-7.6%
-0.9%
-5.5%
8.9%
0.7%
11.0%
1.1
-1.6
2.2
0.1%
0.1%
1.9%
-0.2%
-0.3%
-0.9%
-0.1%
0.1%
2.9%
Growth
Q-to-Q or Chg Chg Q-to-Q
M-to-M Y-to-Y or M-to-M
-3.7%
-0.1%
-2.9%
-4.8%
0.9%
-0.2%
-2.5%
0.4%
1.9%
-0.5%
-0.1%
0.1%
-0.1
1.2
-0.4
-0.2%
-0.4%
1.8%
0.0%
-0.7%
-0.7%
-0.4%
-0.4%
2.8%
1
A three-month moving average is used to smooth out volatility in consumer confidence
and retail sales
2 Consumer spending (inflation-adjusted) is estimated by Kantar Retail
Y-to-Y = Year-over-Year change; Q-to-Q = change from prior quarter; M-to-M = change
from prior month.
Chg Y-to-Y = rate of Year-over-Year change in percentage points; Same for quarterly
and monthly growth.
All data is seasonally adjusted unless indicated by "NSA" or Not Seasonally Adjusted
Source: EuroStat, UK National Statistics, Spain National Institute of Statistics and Kantar Retail
© Copyright 2013 Kantar Retail
11
Frank Badillo
Senior Economist
Doug Hermanson
Economist
KRIQ
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F: +614.355.4059
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Topics
& Trends > Macroeconomics
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