Expectations on Sales and Employment Deteriorate in the Retail Sector The gap between Turkey and the EU widened at the highest rate since the beginning of 2012.

ANKARA - TEPE which has been standing in the negatives since January had a value of -2.6 in May. The Index did not make it to the positives despite the upwards trend. TEPE, therefore increased month-on-month by 1.7 points but decreased year-on-year by 4.6 points.

The balance value of the expectations for the next three months stood at 7.3 in May. 39.7 percent of TEPE survey participants expect an improvement in their business activities in the next three months while 34.4 percent expect a deterioration. This implies a 10.4 point decrease compared to May 2011 and a 2.4 point decrease compared to April 2012.

In May 2012, 23.1 percent of the participants declared a year-on-year improvement in business activities whereas 53.4 percent declared deterioration. Volume of business activities, therefore decreased by 4.1 points compared to May 2011 and by 5.1 points compared to April 2012.

The EU-27 Retail Confidence Index stood at -14.6 in May 2012, decreasing both year-on-year and month-on-month by 12 points and 6.1 points, respectively. The gap between Turkey and EU widened at the highest rate since the beginning of 2012.

Comparing the retail confidence indices for the EU-27 countries and Turkey in May 2012, year-on-year drops were observed in all EU countries excluding Greece, Romania, Bulgaria, and United Kingdom. The harshest drops were experienced by Italy, Lithuania, Belgium, and Germany. Eurozone countries performed worse than the overall EU region compared to both May 2011 and April 2012.

Furniture, lighting and household articles sector outperformed all other sectors in May 2012 compared to may 2011. This was followed by the food, beverages, and tobacco products sector, non-specialized stores sector and textiles, ready-made clothing and footwear sector. All sectors but the mentioned four declined compared to May 2011. The decline in performance was less than the average in electrical appliances, radio and televisions sector but more than the average in “others” sector (gas station, pharmacy, perfumery, hardware, glassware, stationery etc.) The sharpest year-on-year drop was observed in the motor vehicles sector, which is on decline since the beginning of 2012.

Question-based assessment of TEPE survey results reveal that the level of business activities compared to the last three months and the last year and expectations on orders placed with suppliers, sales volume and employment in the next three months deteriorated both year-on-year and month-on-month. The sharpest decrease was recorded in the expectations for employment in the next three months. The current volume on inventories also declined. Expectations for the number of stores next year showed an improvement.