The business climate in Germany’s retail sector has shown a slight improvement as Christmas approaches, according to new data from the ifo Institute.
According to the ifo Business Climate in Germany index, the indicator for the German retail sector stood at -22.1 points in November – up from -25.2 points in October – indicating that retailers have a more favourable view of their current situation.
In addition, business expectations for the coming months have ‘brightened somewhat’, the ifo noted, but remain at a low level.
‘Somewhat More Hopeful’
“Conditions are difficult,” commented ifo expert Patrick Höppner. “Nevertheless, retailers are somewhat more hopeful about the current holiday shopping season.”
Car dealerships and clothing stores are more favourable about the current business climate in Germany, compared to the retail sector average, the data showed. At the same time, sentiment was weaker among furniture and furnishing stores, bicycle retailers, and food retailers.
According to the ifo, many retailers are planning sales price increases in the coming months.
“Consumers can expect to pay more for the same product at the checkout, especially when it comes to food and furniture,” Höppner added.
However, bicycle prices are expected to decrease, and price increases for cars and consumer electronics are projected to remain subdued.
The Trump Effect
A separate ifo Institute study, undertaken last week, indicated that the re-election of Donald Trump as US president is viewed with significant concern by German economists.
Among some 180 economists who participated in the study, which was undertaken in collaboration with Frankfurter Allgemeine Zeitung, one fifth foresee ‘very negative’ effects on Germany’s economic growth, with an additional 69% predicting ‘rather negative’ outcomes.
Just 7% anticipate no impact, while 2% expect positive effects.
