The business climate for German retailers 'brightened further' in April, compared to the previous month, the Ifo Institut has said in its latest update.
The business climate index for retailers rose to -14.5 points, up from -17.5 points the previous month, with assessments of the current business situation also improving significantly.
Retailers’ business expectations are also now 'somewhat more optimistic, but remain largely cautious', the Ifo said.
“Consumer-related businesses are likely to support the overall economy in 2024,” commented ifo expert Patrick Höppner.
Retail Segments
In terms of individual retail segments, DIY stores witnessed a significant improvement in demand in the first quarter of 2024, with only 42% reporting low demand compared to 73.1% in the fourth quarter of 2023.
Similarly, in clothing, the percentage of businesses experiencing low demand decreased from 84% to 50.2%.
“The recent rise in real incomes is stimulating consumption," Höppner added. "Consumers are spending more money again, which is good for retailers.
"As a result, the recent widespread demand weakness is also receding in retail as a whole: in the first quarter of 2024, 47.6% of businesses were affected, down from 54.4%."
Staffing Issues
Despite the overall improvement, one-third of retailers still face challenges in finding skilled workers, although this is a slight decrease from 42.6% in the fourth quarter of 2023, the Ifo Institut said.
While the situation has improved in clothing retail and food retail, car dealerships and retailers of consumer electronics, electrical goods, and electronic household appliances continue to struggle with staffing issues, the Ifo said.
Read More: German Retail Sales Rise More Than Expected In March, Boding Well For Economy
