Real, seasonally adjusted retail sales:

March: -2.1% m/m, -3.5% y/y

MNI survey median: +0.3% m/m
MNI survey range: -0.5% to +1.0% m/m

February: -0.4% m/m, +1.5% y/y (revised from -0.3%/+1.1%)
—

FRANKFURT (MNI) – Retail sales volumes in Germany fell in March for
the second consecutive month, undershooting even the most pessimistic
forecasts, the Federal Statistical Office said Friday.

The 2.1% monthly drop left turnover at its lowest level since last
April and 3.5% lower on the year. Nevertheless, sales were still up 0.2%
in 1Q after a 0.6% fall in 4Q.

Food, drink and tobacco sales, for which only annual comparisons
are available, were 4.8% lower than in March 2010, while non-food
turnover was down 2.4% over the same period.

Although sales lost further ground, inferring that consumption also
weakened may be going too far. Sales figures are notoriously volatile
and among the most revised. Moreover, recent indicators suggest that
German consumers are all too willing to spend on more than just the
essentials.

The latest European Commission survey noted a further improvement
in retail sentiment last month, as companies grew more optimistic
regarding both their current situation and the coming six months, while
an above-average proportion of consumers still planned to make a major
purchase within the next 12 months.

A three-month high in retail sales growth this month lifted Markit
Economics’ retail purchasing managers index (PMI) to 54.6, more than
five points above the series’ long-run average.

“Retailers also showed signs of improved confidence about the
underlying outlook for sales, as the value of goods ordered for resale
rose at a survey-record pace and staff recruitment was the strongest
since September 2007,” said Markit senior economist Tim Moore.

Retailers have good reasons to be optimistic, as the GfK Group’s
consumer climate index showed households’ propensity to buy still
“holding its own” despite growing inflationary pressures, thanks to
rising employment and a robust economy.

However, the GfK warned that consumers’ willingness to spend would
eventually decline if prices continued to rise at their current pace:
“Experience shows that increasing price expectations usually have a
dampening effect on the propensity to buy.”

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

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