German retail sales posted their first monthly increase in three months in May, raising hopes that consumer spending may stabilise on the back of a labour market recovery.
An upbeat manufacturing survey and news of a record jump in engineering orders in May also indicated that Europe's largest economy is gaining steam.
Preliminary Federal Statistics Office data released today showed retail sales rose 0.4 per cent in seasonally adjusted terms from April, in line with a Reuters poll. On the year, they fell 2.4 per cent, worse than forecasts for a 1.6 per cent decline.
Economy minister Rainer Bruederle was positive about the economy following the sales data, comparing Germany's recovery from a slump in 2009 to its performance in the World Cup soccer.
"Germany is back - not just in sports, but also in terms of the economy," he told parliament in a speech, adding that it was time to begin an exit from stimulus programmes.
A survey of purchasing managers also released on Thursday showed Germany's manufacturing sector expanding for a ninth month running in June despite signs austerity measures abroad may be slowing demand.
Engineering orders released by industry association VDMA showed a 61 percent annual jump in real terms in May - the largest single increase on record compared to historical data dating back to 1977.
"Consumer spending and retail sales should stabilise after a weak first quarter. We should see slight increases," said Juergen Michels, an economist at Citigroup.
"One of the main reasons for this is that shortened hours are on the wane and employment is rising. The labour market has been amazingly stable," he added.
Unemployment fell for the twelfth month running in June to its lowest level since December 2008, adjusted for seasonal swings, Federal Labour Office data showed on Wednesday.
That suggests consumers, who typically cut spending on big-ticket items such as cars or TV sets if they think their job is at risk, may soon be more willing to open their wallets.
Germany emerged from its deepest post-war recession in the second quarter of last year but the recovery slowed over the winter when severe weather disrupted business activity.
Planned government austerity measures, due to take effect from next year, pose a risk to consumption, however, as they include cutbacks in public services.
Reuters