German retail sector clinches best quarterly performance since 2006

Growth in the German retail sector slowed down slightly in September but the overall quarterly performance was the best since 2006.

The Markit retail purchasing managers’ index (PMI) declined from 54.7 in August to 54.0 last month, marking the 12th consecutive increase in retail sales, while the average PMI reading for the quarter as a whole was the best in nearly nine years.

A combination of good weather, new products launches and an increase in tourism contributed to the solid performance, the report added.

Annual retail sales growth slowed down slightly in September, although approximately 40% of the companies surveyed reported higher sales volumes than in the corresponding period in 2014.

However, German retailers posted a further decline in gross operating margins in September, although the pressure eased a little from the previous month, while retailers increased their buying activity at the fastest pace since February.

The retail sector continued to add staff, with 7% of the companies surveyed adding to their payrolls in September, although the rate of employment slowed down from August and was the weakest since March.

Meanwhile, the survey revealed German retailers missed their target sales for the 17th consecutive month, although the gap between planned and annual sales narrowed last month.

“While sales targets were missed again and margins continued to be squeezed, retailers reported optimism towards the one-month outlook,” said Markit’s economist Oliver Kolodseike.

“Moreover, the fact that firms increased their buying activity in order to build stocks suggests that retailers expect further sales growth in coming months.”