Despite recruitments increasing, shopkeepers see sales falling in March compared to business notched up a year ago, reports Team IFM
Wiesbaden (Germany), May 5: Easter shopping shifted to April this year, denting the figures for the German retail segment in March as compared to the year-ago period, according to the country’s statistical office.
Moreover, contrary to what economists had forecast, retail sales fell despite employment having risen in the month under review, compared to March 2013, which also had one less day of shopping, official data released here on Wednesday showed.
Destatis, as the German Federal Statistical Office is known, said retail sales – a gauge of consumer confidence in any country – fell 1.9 percent in March this year from the corresponding month in 2013. In the process, the 0.4 percent upsurge shown by the sector in February was negated.
Interestingly, data showed that sales fell even as the situation improved on the employment front, with 376,000 more people being recruited in March this year, reflecting an increase of 0.9 over that of March 2013.
But while various segments of the retail sector saw a decline, sales of beer rose compared to the year-ago period, underscoring Germany’s reputation as one of the largest consumers of the beverage globally.
Germany has three of the world’s 10 largest retailers in Lidi, Metro and Aldi. With a population of 80 million, it is also believed to boast of the largest retail market in Western Europe, with stringent buyer protection laws.
The Destatis figures belied a somewhat rosier picture painted by economists, who had expected a 1.7 percent rise in sales. Economy tracker Markit released a report on the German retail sector on April 4, saying “year-on-year sales also rose during March, with the pace of expansion accelerating to a two-year-high.”
Markit’s report, which was based on a survey of 400 German retailers, also said “around 46 percent of the survey panel signalled an increase, while 28 percent reported a decline.”
Commenting on the survey data, Oliver Kolodseike, economist at Markit and author of the report, said the month-on-month picture was nothing to cheer about.
“Retail data confirm the signals sent by the manufacturing and services PMI releases earlier in the week, suggesting that the economic upturn in Germany has lost some of its recently strong growth momentum,” Kolodseike said.
“The headline index dipped to a near one-year low, indicating only a marginal rise in sales compared to the previous month and the rate of job creation eased to a six-month low.”
At the same time, he said year-on-year sales had risen at the quickest pace in two years. “Levels of optimism surged higher and German retailers exceeded their sales targets to the greatest extent since late-2005.”
EASTER SHOCK
Traditionally, the retail sector witnesses an upward curve in sales in the weeks preceding a festival such as Christmas or Easter. Wednesday’s data from the Federal Statistical Office told a different story.
According to Kolodseike, the recent economic upturn in Germany has lost some of its growth momentum in recent weeks, as reflected in more subdued performance by the manufacturing sector in the country.
For instance, the final seasonally adjusted Markit/BME Germany Manufacturing Purchasing Managers’ Index or PMI – a single-figure snapshot of the performance of the manufacturing economy – showed the manufacturing sector had witnessed a slower improvement in operating conditions in March, with the index posting 53.7, down from 54.8 in February.
According to provisional results of the Federal Statistical Office, retail turnover in March 2014 decreased 1.9 percent in real terms and 1 percent in nominal terms compared with the corresponding month of the previous year.
“The number of days open for sale was 26 in March 2014 and 25 in March 2013,” Destatis said in a statement. “However, the Easter sales fell last year in the month of March, this year it was, however, in April.”
When adjusted for calendar and seasonal variations, it said the March turnover was in real terms 0.7 percent and nominal terms 0.6 percent smaller than that in February this year.
On the brighter side, when compared on a quarter on quarter basis with the previous year, turnover in retail trade was larger by 0.2 percent in real terms in the first three months of 2014, and by 1.2 percent in nominal terms than that in the corresponding period of the previous year.
The Federal Statistical Office said the beer producing and storing establishments in Germany sold 20.5 million hectolitres of the beverage in the first quarter of 2014. That was an increase of 2.8 percent from the corresponding period of the previous year.
Retail sales of food, beverages and tobacco plunged 4.2 percent, while sales of non-food items slid 0.1 percent in March.
RECRUITMENTS RISE
Lower sales are usually associated with a tighter employment segment. However, the job situation in Germany was much better in March 2014; the Statistical Office said roughly 2.3 million people were unemployed in the month under review – 53,000 less than a year earlier.
Destatis said that in March this year, roughly 41.8 million German residents were employed, an increase of 376,000, or 0.9 percent over that of March 2013.
Compared with the previous corresponding period, it said, job creation witnessed “a slight increase in the growth rate” in the December 2013-February 2014 period.
According to provisional results of the employment accounts, the number of persons in employment increased by 99,000, or 0.2 percent, from February to March. This was “because of the start of the spring upturn,” Destatis said in its statement.
“After seasonal adjustment, that is, after the elimination of the usual seasonal fluctuations, the number of persons in employment increased by 37,000, or 0.1 percent, in March 2014 compared with the previous month,” it added.