Real, seasonally adjusted retail sales:

February: -0.3 m/m, +1.1% y/y

MNI survey median: +0.4% m/m
MNI survey range: +0.2% to +0.9% m/m

January: +0.4% m/m, +2.4% y/y (revised from +1.4%/+2.6%)
—

FRANKFURT (MNI) – Turnover in the German retail sector unexpectedly
lost ground in February, while January’s increased was revised downward
significantly, the Federal Statistical Office reported on Thursday.

With sales in February dipping 0.3%, the annual increase narrowed
to 1.1% from January’s 2.4% rise.

Disaggregating the annual change, food, drink and tobacco sales
fell 2.0%, while non-food sales were up 1.8%.

With an unemployment rate at its lowest level since 1991, the
robust labour market should continue to underpin income expectations.
However, rising energy and commodity prices are likely to limit
households’ desire to open up their wallets for anything other than the
essentials.

Retailers polled in the March purchasing managers index (PMI)
reported slowing sales growth, bringing the PMI retail figure down to
53.0, its lowest level in five months. While better weather and improved
economic conditions supported turnover, demand suffered from the squeeze
in disposable incomes, the PMI report noted.

The Ifo institute’s sector sentiment index declined for the third
consecutive month in March, though less than in previous months, as
retailers revised downward their assessment of order books and their
outlook for the coming six months.

The expected erosion in household morale, as indicated by the fall
in the GfK Group’s latest consumer climate indicator, echoes retailers’
waning in optimism. Still, the research group remains cautiously upbeat
for private spending, reiterating its forecast for a 1.5% rise in
consumption this year.

“Despite the small setback, private consumption will continue to
play an important role in macroeconomic developments,” GfK said. “Its
importance will increase even further if growing risks in the
international arena mean that exports fail to expand as quickly as
economic experts were expecting only a few weeks ago.”

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

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