Wholesaling: Drastic sales declines weakens investment propensity

In 2008 wholesalers still benefited from the favourable economic situation. Sales (without motor vehicles) increased in 2008 nominally by almost 8 percent or by 3.7 percent in real terms. Already in autumn 2008 a negative development set in, however. In the first half of 2009 wholesalers sold 16 percent (9 percent in real terms) less than at the same time of the previous year. Industrial B2B was particularly hard hit. Here sales declined by 23 percent. Consumer goods wholesalers were less strongly affected, but they also suffered turnover losses. Since May the Ifo Business Climate indicator in wholesaling has been rising, but the scepticism of the wholesalers concerning the business outlook is still substantial so that their investment propensity has also weakened considerably in comparison to the previous year. In 2009 investments will be largely limited to replacement purchases and to individual strategic investment areas such as information and communication technology. Overall, the results of this year’s Ifo Investment Survey point to a 14 percent decline in wholesale investments.