Sectoral Report of Bank Austria Creditanstalt Economics & Market Analysis: Business is good
- Retail trade benefiting in 2006 from positive consumer sentiment
- Many new (part-time) jobs created
- Trading year shapes Christmas business, 2006 produces record results
Austrian retail trade has expanded this year by roughly 3 percent, generating sales revenue of approximately EUR 46 billion, as revealed by the latest sectoral report published by the economic researchers at Bank Austria Creditanstalt (BA-CA). This is primarily attributable to the sustained consumer spending of Austrians which is being bolstered by encouraging macroeconomic developments and will benefit the sector through into the coming year. Almost all of the major segments of retail trade reported growth until September. Department stores, book and photography stores as well as the DIY segment were the only ones to chalk up results that were far poorer than the average, while mail ordering also suffered losses.
“The spending spree of Austrians, which has generated sales growth in retail trade of more than 2 percent over the last two years, did not let up in 2006”, said Günter Wolf at BA-CA. Although sales have recovered in comparison to the relatively weak trading years at the beginning of the new millennium, the current rates of growth totalling 2 to 3 percent in nominal terms are relatively weak both by long-term comparison and in relation to previous strong years. Retail trade numbers among the weaker sectors in terms of growth, and will remain so in the future.
Despite the below-average expansion in the sector, for years there have been many new jobs created in retail. Since the middle of the 1990s the number of those employed in the sector has risen by more than 8 percent, and by 1.6 percent between January and October 2006 alone, which is predominantly thanks to the rising popularity of part-time work. In October, a total of 247,000 people, or more than 7 percent of all those employed in Austria, worked in retail. Such employment growth exceeded that of the economy as a whole, generally by far.
Just under half of these retail employees work part time. The reason for the gradual rise in part-time jobs in the sector can be traced back to the increasing concentration of companies in retail as well as to the longer opening hours. Between 1995 and 2004 a total of 20,000 full-time jobs disappeared from the market, though this development has abated somewhat in recent years. Parallel to this, 80,000 part-time jobs were created. Two years ago approximately 123,000 people worked part time in the retail business.
Trading year shapes Christmas business – not the other way round
“Although a good festive season can save what has been a bad year for some retailers or individual segments, the experience of the last fifty years shows that the end to a retail year generally mirrors the year as a whole”, said Günter Wolf at BA-CA. This means that the higher sales are in the months from January to November, the greater the chance is of having better December and Christmas results compared to the previous year.
At sector level the month of December evolved differently to the rest of the year only in a few exceptional cases. Essentially, an increase in retail sales of 1 percent from January to November led on average to growth of roughly 0.8 percent in nominal December sales. Good consumer confidence throughout the year fosters spending sprees around Christmas. If we apply this long-term relation to the 2006 trading year, sales in December should be around 2.3 percent higher than in 2005 based on anticipated nominal sales growth until November of 3 percent. As a result, the growth in the Christmas season result is higher than the average for the last five years, thus posting its highest figure ever both in real and nominal terms.
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