Seasonally adjusted real sales:

July: -0.3% m/m, +0.8% y/y

MNI survey median: +0.5% m/m
MNI survey range: -0.2% to +1.4% m/m

June: -0.3% m/m, +4.7% y/y
—

FRANKFURT (MNI) – Germany’s retail sector contracted more than even
the most pessimistic forecasts had suggested in July, leaving turnover
down for the second consecutive month, the Federal Statistical Office
reported on Wednesday.

Falling 0.3% on the month and matching June’s slide, retail sales
managed only a modest 0.8% gain on the year and left turnover up 0.03%
on the quarter following 1Q’s 0.5% increase

Food, drink and tobacco sales, for which only annual changes are
published, fell 0.4% y/y while non-food sales growth slowed to +1.9%
year-over-year.

Retailers polled in Markit Economics’ latest purchasing managers
index (PMI) reported further declines in sales for August, leaving the
PMI at 48.4, slightly below the long-run average.

However, the outlook for September remains positive, the PMI report
noted, with 25% of respondents expecting sales to beat initial
forecasts.

“Retailers appear increasingly confident that growth in the wider
economy will support domestic consumption,” Markit economist Tim Moore
said following the better-than-expected 2Q GDP report out of Germany
late last month.

Mirroring the optimism of the PMI report, the European Commission
pointed to further improvements in retail sector sentiment, with
assessment of both the present and expected business situations rising
to their highest levels since November 1991 and May 2008, respectively.
In addition, The Ifo institute’s retail business expectations
sub-indicator increased to its highest level in well over three years.

With the number of jobless people still dropping and consumers’
willingness to buy still well above the long-run average in Germany,
retailers’ optimism would appear justified.

According to the most recent GfK consumer sentiment report,
households’ propensity to spend remained only modestly down from June’s
nine-month high in August.

“After the special business cycle of the football World Cup is now
definitely over, the stable high level of propensity to buy seems to be
a good sign of sustained positive consumer sentiment,” the GfK Group
said.

However, the report cautioned against excessive optimism, noting
that planned austerity measures and expiring stimulus programs could
limit any substantial upward trend.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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