Positive Sales Trend in the Retail Trade at the End of 2024. However, Outlook Remains Subdued According to the Retail Business Cycle Report in Cooperation with the Austrian Retail Association

Jürgen Bierbaumer; Sandra Bilek-Steindl

14.02.2025

Positive Sales Trend in the Retail Trade at the End of 2024

However, Outlook Remains Subdued According to the Retail Business Cycle Report in Cooperation with the Austrian Retail Association

"Taking the number of sales days into account, retail sales developed well at the end of the year. The mood among retailers has also tended to recover since November. Both the current assessment of the situation and business expectations improved in the January survey, although pessimistic assessments still predominated overall", says WIFO economist Jürgen Bierbaumer.

The domestic economy was sluggish at the end of the year. Initial calculations for the fourth quarter of 2024 from the WIFO Flash Estimate point to stagnation compared to the previous quarter. Based on seasonally and working day-adjusted figures, economic output was therefore 0.2 percent below the previous year's level. According to the latest calculations of the Weekly WIFO Economic Index (WWWI), momentum remained weak in the first half of January 2025.

Overall, the domestic retail trade (excluding motor vehicles) generated net sales of around 81.7 billion € in 2024 (+2.1 percent compared to 2023). This corresponds to +0.5 percent in real terms. Retail trade excluding motor vehicles and fuels, net sales in the previous year amounted to around 77.2 billion € or +2.7 percent compared to 2023 (+0.9 percent in real terms).

Adjusted for calendar effects, business performance was good not only in November (nominal +3.8 percent, real +2.9 percent year-on-year), but also in December 2024 (nominal +4.6 percent, real +3.1 percent, preliminary figures). The unfavourable location of sales days in December (e.g., 8th December a Sunday) was considered with the calendar adjustment. Sales growth was good in both the food and non-food sectors in both months.

After inflation (CPI) stood at +2 percent in December, it rose to 3.3 percent in January 2025 according to the flash estimate by Statistics Austria. According to the HICP, it was 3.5 percent and therefore above the euro area average (2.5 percent).

The mood among domestic retail companies has gradually improved since the November survey of the WIFO-Konjunkturtest (business cycle survey). Christmas-related business activity in the months from November 2024 to January 2025 is likely to have been better than in the corresponding previous period and therefore also had a positive impact on sentiment.

Compared to Germany, the mood in retail trade, as measured by the European Commission's confidence indicator, has improved significantly in recent months.

The mood among domestic consumers has cooled again in recent months. The gains in optimism, particularly from the first half of 2024, have thus been lost again. Compared to Germany, Austrian households are currently more pessimistic in their sentiment.

According to the current WIFO Economic Outlook from December 2024, the weak consumption momentum is likely to continue in 2025. As a result, the savings rate is also expected to rise further (2025: 12 percent, 2024: 11.4 percent, 2023: 8.7 percent).

On the labour market, the number of unfilled vacancies fell again in January (overall economy –12.3 percent). In January, 9,339 vacancies in retail trade (including motor vehicles) could not be filled promptly, compared to 76,478 in the economy as a whole.

A total of 4,158 insolvencies (according to KSV1870) were opened in 2024, 23 percent more than in 2023. Almost one in five of these were recorded in retail trade (including motor vehicles).