FRANKFURT (MktNews) - Business sentiment among west German retailers improved markedly in January, due to strong Christmas sales and income tax cuts that took effect Jan. 1, according to a survey of 500 German retailers conducted by the consulting firm BBE and published by the Handelsblatt Tuesday.
The index for west Germany improved by roughly seven points to 110.25 points in January. The improvement for Germany to 106.08 in January from 102.45 in December was less marked due to a slightly more pessimistic outlook in east Germany. Figures above 100 indicate most retails are optimistic, figures below 100 show a pessimistic view.
The January west German figures could indicate a turnaround in retail sentiment, reversing the gradual decline since last May.
One major reason for the optimism among west German retailers found by BBE relates to high satisfaction with Christmas retail business. Some 38% of west German retailers reported that their Chrismas sales turnover in 2000 was higher than a year earlier. This contrasts with government retail sales data for December, released earlier in the day, which were weaker than expected.
Looking ahead, 33% of west German retailers expect higher turnover in coming months and 24% expect higher profits, both figures markedly more than in December. A reason for this increased optimism is likely the personal tax cuts which most consumers felt for the first time in their Januaray pay checks.
In contrast to west Germany, the mood and expectations of the retailers in east Germany is markedly gloomier. This most likely mirrors the weaker economic conditions in east Germany, the on-going migration of high-earning consumers to west Germany, and changing consumption patterns in the east (more spending on services than goods).