Business Climate in German Retail Improves Again

The ifo Business Climate in retail brightened further in April. The index rose to -14.5 points, up from -17.5 points in March. Assessments of the current business situation improved significantly. Retailers’ business expectations also became somewhat more optimistic, but remain largely cautious. “Consumer-related businesses are likely to support the overall economy in 2024,” says ifo expert Patrick Höppner.

The trend is particularly clear in DIY stores: in the first quarter of 2024, 42% reported low demand; in the fourth quarter of 2023, it was still 73.1%. In clothing retail, the figure was 50.2%, down from 84%. “The recent rise in real incomes is stimulating consumption. Consumers are spending more money again, which is good for retailers,” Höppner says. As a result, the recent widespread demand weakness is also receding in retail as a whole: in the first quarter of 2024, 47.6% of businesses were affected, down from 54.4%.

One-third of retailers are still having trouble finding skilled workers; in the fourth quarter of 2023, this figure stood at 42.6%. The situation in clothing retail and food retail has eased. But car dealerships and retailers of consumer electronics, electrical goods, and electronic household appliances are still having great difficulties finding suitable staff.