Seasonally adjusted real sales:

March: -2.4% m/m, +2.7% y/y

MNI survey median: +0.2% m/m, -0.6% y/y
MNI survey range: -0.5% to +0.6% m/m

February: +1.1 m/m, -0.4% y/y (revised from -0.4%/-0.9%)
—

FRANKFURT (MNI) – Retail sales in Germany fell back in March, more
than offsetting February’s increase, suggesting private consumption
dampened overall economic growth through the first quarter of 2010, the
Federal Statistical Office reported on Tuesday.

Taking February’s substantially upwardly revised figure into
account, March’s 2.4% monthly decline left sales in the retail sector
2.7% higher compared to March 2009, its highest annual gain since
September 2008. On a quarterly basis, however, the first quarter of 2010
was down 0.9%.

Food, alcohol and tobacco sales, for which only annual figures are
available, increased 3.5%, while non-food sales were 2.8% higher.

As seen in gains in both current conditions and expectations,
German retailers have grown less pessimistic towards their business
climate, pushing the Ifo retail sentiment indicator to its highest level
in just over two years, the Ifo institute reported last month.

Firms cited in the European Commission’s latest sentiment survey
have also demonstrated declining pessimism, with the confidence
indicator rising well above its long-run average on improvements in both
the present situation and the outlook.

However, not all indicators point to good news ahead. Retailers
canvassed by Markit Economics, the firm that publishes the monthly
purchasing managers index (PMI), reported like-for-like sales falling in
April on both a monthly and yearly basis, due to strong competition and
weak consumer sentiment.

While households are growing steadily more optimistic regarding the
outlook for both the general economy and their own incomes, they were
still hesitant about opening their pocketbooks in April, resulting in
further declines in the sub-index, the GfK Group reported last month.

“The propensity to buy is currently being strongly affected by the
considerable rise in energy prices of late,” GfK said. “This has
resulted in a renewed increase in consumers’ general price
expectations.”

For this year, the German Retailers Association expects real retail
sales to fall 0.5%, warning that an increase in local taxes “could weigh
on consumer sentiment” and thus hamper household retail spending.

Nevertheless, consumers’ intentions of making major purchases over
the next year increased for the third consecutive month in April,
leaving the sub-indicator only eight points below the series high, the
Commission noted.

–Frankfurt newsroom +49 69 720 142; email: frankfurt@marketnews.com

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