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German retail business climate deteriorates in June: ifo

02 Jul '24
15 min read
German retail business climate deteriorates in June: ifo
Pic: Adobe Stock

Insights

  • Germany's retail business climate declined significantly in June, dropping to minus 19.5 points from minus 13.3 in May, as per the ifo Business Survey.
  • Retailers reported a poorer business situation and lowered future expectations.
  • Despite higher disposable incomes, consumer spending remains low, particularly affecting clothing retailers.

The business climate in Germany’s retail sector saw a significant decline in June, according to the latest ifo Business Survey. The indicator dropped to minus 19.5 points from minus 13.3 points in May, indicating a marked deterioration in the retail business environment. Retailers reported a poorer assessment of their current business situation and significantly lowered their expectations for the coming months.

Despite an increase in consumers’ disposable incomes, the additional funds have been saved rather than spent, leading to reduced consumer spending. This trend has particularly impacted clothing retailers, who have reported a much more negative business situation compared to May and have drastically lowered their expectations for the future.

High inventory levels continue to be a challenge for many retailers. Consequently, companies are more inclined to reduce their orders for goods in the upcoming months rather than increase them. Employment expectations within the retail sector remain subdued due to restrained demand, which is likely to continue affecting retailers’ business performance, as per the ifo Institute.

ALCHEMPro News Desk (DP)

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