Retail sales in Germany rise marginally in January

Retailers in Germany witnessed just a marginal increase in monthly sales in January, with the pace of expansion slowing down from December. The seasonally adjusted Retail PMI for Germany dropped to 50.3 in Germany from 52 in December. Excluding a fall witnessed in November, the January reading is the lowest in one year. Moreover, the figure was lower than the long-run series average. Certain companies showed that sales had been dragged down by poor weather.

The data for January indicated towards a year-on-year drop in German retail sales for the first time since October 2014. However, the rate of reduction was just marginal. The outlook for the one-month sales stayed muted in January after slipping to a 12-month low at the end of 2016.

Those factors expected to depress sales growth in the coming three months include an uncertain outlook, upcoming election, poor weather and new competitors. However, according to panellists, Easter business, a spring uplift, better weather, rebounding demand for automobiles and a higher client footfall might aid in stimulating sales in the next three months.

In the meantime, retailers in Germany missed their sales targets for the eighth straight month in January. The extent of underperformance deteriorated significantly, with the respective index dropping to its lowest since January 2016. The pace of purchase price inflation faced by German retailers was slightly changed from December’s marked pace in January. Increased prices for food and energy were reportedly behind the rise in cost burdens.

A combination of increased purchase prices and special promotional offers led to an increased squeeze on gross operating margins at German retailers. Meanwhile jobs growth in the sector was marginally faster than in December. The pace of hiring was much slower than the average in the 80-month sequence of expansion, noted Markit.