Portugal's Shops Sold More in July and Employed Fewer People, the First Drop in Trade Jobs Since April 2021

Portuguese shops sold more in July than a year earlier. They did it with fewer staff. Employment across the retail and wholesale trade fell 1.6 percent year on year, the first negative reading since April 2021, when the sector was still climbing out of the pandemic.

The figures come from the Instituto Nacional de Estatística (National Statistics Institute) release of 28 August covering July 2026. The headline looks unremarkable: trade turnover, adjusted for calendar and seasonal effects and stripped of inflation, grew 2.0 percent year on year, a tenth of a point better than June. Underneath, the labour numbers turned.

The sales side

• Retail (excluding vehicles) rose 3.0 percent, accelerating from 2.7 percent in June. Food, drink and tobacco grew 2.5 percent, non-food 3.3 percent.
• Wholesale went from a 0.6 percent contraction in June to 0.5 percent growth.
• Motor trade, the sale, maintenance and repair of vehicles, grew 3.9 percent but decelerated sharply, losing 4.6 percentage points on June.

Before inflation is taken out, total trade turnover was up 6.8 percent. Month on month the picture is weaker: the total index fell 1.0 percent after rising 1.5 percent in June.

The labour side

Employment, pay and hours moved in three directions in July. Employment fell 1.6 percent year on year after rising 1.1 percent in June. Gross pay rose 4.8 percent, down from 8.4 percent. Hours worked rose 1.1 percent.

The fall is not evenly spread. Employment was down 2.4 percent in retail, 0.8 percent in the motor trade and 0.6 percent in wholesale. Within retail the concentration is sharper still: food retail shed 3.0 percent of its jobs, and specialised food shops, meaning the butchers, bakers, fishmongers and greengrocers, shed 8.1 percent. Non-specialised food stores, largely supermarkets, were down 1.8 percent, while non-food retail employment actually rose 2.1 percent.

Specialised food shops were also the only category where pay fell, down 1.1 percent, while wholesale pay rose 6.3 percent. Fewer people, and less money reaching those who stay.

How solid is the number

The two halves of this release are built differently. Turnover and hours come from INE's monthly survey of trade businesses, which had an 88.4 percent response rate at first publication. Employment and pay are not survey answers: they come from the Declaração Mensal de Remunerações (Monthly Remuneration Declaration) that firms file with Segurança Social (Social Security), which makes the employment fall an administrative count rather than an estimate.

It is still a first reading, and INE revised June's turnover growth down by 0.8 percentage points in this same release. One month is not a trend. But the last time this index went negative, in April 2021, was a different world.

What this means for you

If you work in Portuguese retail, the squeeze is landing on small specialist food shops rather than the chains. That sits awkwardly beside the sector's new pay floor: the large-store collective agreement becomes binding on 31 August, lifting 75,809 workers who were below it.

If you are a shopper, volumes rising while headcount falls usually shows up as thinner staffing, longer queues and more self-checkout.

If you are watching the economy, this is one of the first monthly indicators pointing to a cooling labour market rather than just cooling prices. It landed the same day as the survey in which household sentiment slipped back while construction hit a 25-year high, and it runs the opposite way to May, when sales were the weak part and jobs were not.

The August reading is due at the end of September. Whether the employment fall repeats is the number to watch.