German retail sales fall sharply
German retail sales tumbled by their largest amount in over three years in December, preliminary data showed today, denting hopes that private consumption can compensate for weaker exports and lift Europe's largest economy this year.
The notoriously volatile indicator slid by 4.7 per cent compared to a year ago, the weakest annual result since May 2009. On a monthly basis, the fall was a more modest 1.7 per cent, still the biggest drop since May 2011.
"These are disappointing numbers," said Christian Schulz of Berenberg Bank. "Consumers are not opening up their wallets."
Economists polled by Reuters had expected retail sales to fall by 0.1 per cent on the month and by 1.6 per cent on the year.
German unemployment has been creeping higher for nearly a year, but still remains close to post-reunification lows. Wages are also on the rise thanks to Germany's strong performance during the euro zone debt crisis. But these factors have not yet translated into robust increases in private consumption. Gross domestic product (GDP) contracted by 0.5 per cent in the fourth quarter of 2012, according to an early estimate from the Statistics Office, and the government is forecasting meagre growth of 0.4 per cent this year.
Exports to big trading partners in Europe are slowing as the debt crisis enters its fourth year, and Berlin now expects foreign trade to be a drag on GDP in 2013.
According to a breakdown of the retail data, sales fell almost across the board in December, with food, drinks and tobacco down 4.1 per cent on an annual basis in real terms, and clothes, shoes and textiles down 6.5 per cent.
Still, some economists warned against reading too much into the data, pointing to anecdotal evidence from retailers on their Christmas sales.
"The retailers did not report sensational Christmas sales, but they were broadly satisfied. It's hard to reconcile this with the strong decline we've seen here," said Alexander Koch of Unicredit.