A slight rise in German retail sales in July was not enough to dampen mounting concerns that lacklustre private consumption could hinder growth for the foreseeable future.
German retail sales including vehicles and turnover at petrol stations rose by 0.6 per cent on the month in July in real terms, preliminary Bundesbank figures showed today.
However, this followed a drop of 3.5 per cent in June, and the German central bank's data showed the sales volume over the two-month period was the weakest in 10 years in Germany.
"The whole outlook remains weak," said Ralph Solveen, an economist at Commerzbank in Frankfurt.
"(Evidence) suggests that private consumption will virtually stagnate over the coming quarters so it will not be providing any boost to the German economy next year either," he added.
Earlier today, a narrower retail index published by the Federal Statistics Office excluding car sales and petrol station turnover showed an unexpected monthly decline of 1.5 per cent.
It was the second straight fall, and contrasted with a consensus poll forecast for sales to be flat in July.
Despite a steady 2-1/2 year decline in jobless numbers and record employment, consumer spending in the German economy has remained sluggish, weighed down by high energy and food prices.
Figures released last week showed German gross domestic product (GDP) contracted by 0.5 per cent in the second quarter. The decline was led by a drop in private consumption, which shaved 0.4 percentage points from GDP in the quarter.
Germany's adjusted jobless rate dropped to a 16-year-low in August, but many economists believe unemployment is likely to begin rising again in coming months due to the slowdown.
Reuters