Retailing (Germany):
Worsening business situation

The by far more unfavourable assessment of the current business situation in retailing resulted from the drastic worsening in the non-food sector, whereas assessments from the food and beverage sector were even more positive than in the previous month. After the brief worsening apparently caused by the increase in the rate of VAT, the firms now report a more positive outlook for the coming half year. Their order plans are now not quite so restrictive despite increased inventory pressure. The scope for price increases has narrowed for consumer durable and nondurable goods but has widened for food and beverages. Employment levels should remain unchanged; one year ago 12% of the firms expected declining staff levels. In eastern Germany the business situation also deteriorated but unlike the federal average increased scepticism was also expressed regarding the business outlook. Order plans were again revised downwards, especially since inventory pressure has grown. Reports of planned price increases were less frequent. The survey responses point to a reduction in staff levels in the coming months.