Seasonally adjusted real sales:

February: -0.4 m/m, -0.9% y/y

MNI survey median: -0.3% m/m
MNI survey range: -0.5% to flat m/m

January: -0.5 m/m, -4.0% y/y (revised from flat/-3.4%)
—

FRANKFURT (MNI) – Retail sales in Germany contracted more than
generally expected in February, weakening hopes of a revival in
consumption for the early part of this year, the Federal Statistical
Office reported on Thursday.

In real terms, turnover fell 0.4% month-over-month. Taking into
account the downward revision to the previous month’s figures, the
annual decline narrowed to 0.9% from -4.0% in January. Compared to the
fourth quarter, average turnover in January and February was 0.3% lower.

Food, alcohol and tobacco sales, for which only annual figures are
available, increased 0.4%, while non-food sales were 1.5% lower than in
February 2009.

While bad weather hampered sales last month, retailers had revised
up “considerably” their assessment of the business situation in March,
fully undoing February’s decline, the Ifo institute reported.

Firms polled in the latest retail purchasing managers index (PMI)
survey also reported improving conditions following the slowest decline
in monthly sales since last August. As a result, the retail PMI figure
rose over seven points to 49.3 in March, its best reading also since
August.

Companies cited better weather conditions for the sharp
deceleration in the pace of decline in sales. “However, underlying
weakness in consumer spending continued during March, as like-for-like
sales were down sharply on one year earlier,” Markit Economics, the firm
that conducts the PMI studies, said.

Consumer spending may remain at subdued levels for some time with
households’ propensity to buy falling for the second consecutive month.

“In particular, higher petrol prices have led to rising price
expectations among consumers in the past few weeks,” and “experience
shows that this has a dampening effect on the propensity to consume,”
the GfK Group explained in its latest consumer sentiment report.

After a marked deterioration in February, retail sentiment in March
improved, the European Commission noted. Fueling this improvement was a
better current business situation and expected business situation.

The German Retailers Association (HDE) expects retail sale turnover
to contract by 0.5% in real terms this year.

HDE managing director Stefan Genth warned that an increase in local
taxes in Germany “could weigh on consumer sentiment” and thus hamper
household spending on retail goods.

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

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