German retail sales rise moderately in September; retailers expect higher sales next month

The survey results for September Germany retail PMI indicate towards ingoing moderate growth of retail sales. Even if sales targets were missed again, firms are quite optimistic that the sales for next month would be higher than planned. The seasonally adjusted headline retail PMI dropped a bit to 53 in September from five month high of 54.1 in August. This signals a slower sequential growth in retail sales.

Anecdotal evidence linked the rise to special sales offers, improved advertisement and good weather. Growth of sales also slowed on an annual basis, with the respective index dropping to a five-month low. However, about one-third of the survey panel registered a rise as compared to the same month one year ago.

The recent survey results have hinted that actual like-forlike sales dropped short of plans in September. Nonetheless, the extent to which retailers underperformed alleviated a bit from August. But firms anticipate October’s sales to be higher than planned. According to some panel members, the optimism is due to more clients and a general positive trend in the sector.

Factors anticipated by retailers to stimulate sales in the coming three months include new products, beginning of Christmas sales, discount offers and improved advertisement. The factors anticipated by German retailers to depress sales in the coming three months are lack of tourists and winter. German retailers witnessed a further drop in gross operating margins due to a combination of discount sales and sharply increasing purchase prices. However, the pace of decline alleviated since August and was just mild.

Retailers in Germany increased their purchasing activity to the highest degree in a year during September. Furthermore, certain firms placed their purchases directly into stock that led to a further accumulation of inventories. However, the rise in stock was a tad softer than that witnessed in August.

The latest survey data underlined a further rise in average purchase prices in the retail sector of Germany. The pace of inflation continued to be marked in spite of slowing slightly since August. Employment at Germany’s retailers increased in the month. Also, the pace of job creation accelerated slightly.