German retail sales rebound strongly in April

German retail sales rose by a larger-than-expected 2

German retail sales rose by a larger-than-expected 2.8 per cent in April compared with the prior month, bouncing back from declines earlier in the year and signalling a solid start to the second quarter.

The Federal Statistics Office said sales fell 1 per cent in real terms year-on-year, but attributed that drop partly to the fact that April had three fewer sales days in 2006 than in 2005.

The figures were distorted because Easter fell in April this year, while in 2005 it was in March. "This looks like a good start to the second quarter," said Ulrike Kastens, an economist at Sal. Oppenheim.

Consumer spending has been a weak point of the German economy in recent years as high unemployment and wage pressures have dampened appetite for purchases.

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But there are tentative signs of a turnaround in both the labour market and retail spending. Seasonally-adjusted unemployment in May fell by a much larger-than-expected 93,000, a source familiar with official data due later today.

The strong month-on-month retail sales gain follows a GfK market research group report on Monday that consumer sentiment was set to jump to its highest for nearly five years in June, lifted by shoppers' rising optimism on the economy and an unprecedented readiness to spend.

However, recent company results have pointed to a more mixed picture for retailers in Europe's biggest economy. Some, like sports good makers Adidas and Puma expect a sales boost from the looming soccer World Cup.

Others, like Germany's biggest retailer Metro and department store operator Karstadt still face a tepid retail climate.