German Retail Sales Fall Again In September

German retail sales fell more than many economists expected in September as the financial crisis continued to discourage people from spending. Sales, adjusted for inflation and seasonal swings, dropped 2.3 percent from August, when they rose 1.9 percent. That's the biggest decline since May 2007.

According to provisional results of the Federal Statistical Office (Destatis), turnover in retail trade in Germany in September 2008 was in nominal terms 4.1% and in real terms 1.2% larger than that in the corresponding month of the previous year. The number of days open for sale was 26 in September 2008 and 25 in September 2007. When adjusted for calendar and seasonal variations (CENSUS-X-12-ARIMA), the September turnover was in nominal terms 2.5% and in real terms 2.3% smaller than that of the preceding month. Compared with the corresponding period of the previous year, retail turnover was in the first nine months 2008 in nominal terms 2.4% larger and in real terms 0.5% smaller.
Federal Statistics Office

And there is almost certainly worse to come, since slaes continued to fall in Germany in October, according to the Markit economics purchasing managers index (out yesterday), although not as rapidly as in September. The monthly sales index rose to 46.7, up from 44.6 in September.





The German government recently slashed its growth forecast for next year to just 0.2 percent. Last year, the economy expanded 2.5 percent. Merkel said this week her government will announce a package of "targeted, bold and sustainable'' measures in an attempt to boost the now severely flagging economy.

The Decline In Eurozone Retail Sales Gathers Momentum

The latest Bloomberg Euro-Zone Retail Purchasing Managers' Index, which is based on a mid-month survey of economic conditions in the euro area retail sector, fell from 46.2 in September to 44.3 in October, signaling a drop in euro-zone retail sales for the fifth consecutive month and one of the steepest declines recorded since the survey began five years ago.


The PMI, which provides data one month ahead of government-issued figures, based on a survey of more than 1,000 retail executives in Germany, France and Italy, showed that retailers cut employment at the fastest rate for four years in the face of falling sales and deteriorating profit margins. Also evident was a further easing of price pressures in the retail sector.


Sales fell in Germany, France and Italy as retailers reported the adverse effects of the global financial market turmoil, rising job market insecurity and stretched household budgets:

Italy saw the steepest drop in retail sales of the three countries covered. The rate of decline picked up sharply during the month with the month-on-month decline in the index the largest yet recorded by the Italian survey. The index plunged from 42.8 to 34.8.



Sales also fell in Germany, at the weakest rate of the current five-month sequence. The monthly sales index rose to 46.7, up from 44.6 in September.



Sales in France fell for the first time in four months, and at the weakest rate of the three countries surveyed. The index fell from 50.5 in September to a six-month low of 48.5.




Euro-zone sales remained well down on a year ago in October, with the annual rate of decline gathering pace to the joint-second sharpest seen over the past four years. The year-on-year sales index fell from 43.4 in September to 41.4. The annual rate of contraction in Italy was the second-strongest in the survey history, while more modest declines were seen in both France and Germany.

EU Confidence Levels On The Decline

European economic confidence saw its biggest ever fall in October as the global bank crisis generated the bleakest outlook since the early 1990s, according to the findings of this months European Commission economic sentiment survey. The survey results give us just one more dramatic illustration of the devastating impact the financial turmoil is having on the real economy. Pessimism has risen dramatically on all fronts - from manufacturers' expectations about exports to consumers' fears about unemployment.

These gloomy results now make it almost a certainty that the European Central Bank will cut its main interest rate by at least half a percentage point to 3.25 per cent when it meets next week.





The European Union executive's "economic sentiment" indicator for the 27-country bloc fell by 7.4 points in October to 77.5 points. The latest index reading was the lowest since 1993 and marked the largest month-on-month decline ever recorded.

Among the largest EU members, confidence deteriorated most markedly in the Netherlands followed by France, Italy, the UK and Poland.

At the same time, the increasingly-worrying outlook for previously fast-growing eastern European economies is hitting business and reducing export opportunities across the rest of the continent. Details of the latest survey showed EU manufacturer reported export order books at their thinnest since June 2005. Consumers' expectations about unemployment trends in the next 12 months were the gloomiest since March 1994.