Oil rebounds above $42 on Saudi cuts, eyes US data German retail sales probably rose in the final two months of 2008, data showed this morning, but support from shoppers is unlikely to have prevented a sharp contraction in economic growth in the final quarter.
Month-on-month, retail sales in Europe's largest economy rose by a bigger-than-expected 0.7 per cent in real terms in November, and they likely increased in December too, according to preliminary Federal Statistics Office figures.
In recent months, German consumers have saved more than most Europeans and barely one in 20 have direct exposure to falling stock markets. Economists say this has helped to stabilise the domestic economy in the face of weaker foreign demand.
Ralph Solveen, an economist at Commerzbank, said sales in November had been helped by a decline in energy prices and a long pick-up in the labour market that extended into that month.
"But private consumption hasn't stopped the economy suffering a big collapse in the fourth quarter. We expect a contraction in GDP of two percent," he said.
Bundesbank President Axel Weber warned late on Thursday that the German economy would end 2008 on a weaker footing than the bank had previously thought, only starting to regain momentum in 2010.
A collapse in foreign orders has hit the economy hard. German exports posted a record fall in November as demand for cars and others mainstays of the economy plummeted.
The November retail sales rise, which was adjusted for seasonal swings, beat the Reuters consensus forecast for a 0.4 per cent gain. Compared with November 2007, which had one more working day than this year, sales were down 3 per cent.
Over the first 11 months of 2008, sales were down 0.5 per cent on the year. The Office estimated sales could be flat for the full year or show a decline of up to 0.5 per cent.
The 2008 estimate was based on the assumption sales were more likely to have risen in December, based on reports from the industry, a spokesman for the Office said.
Many economists fear shoppers could face a torrid 2009. German unemployment rose in December for the first time in nearly three years, and further job losses are expected.
Deutsche Bank has predicted the German economy could contract by up to 4 per cent this year - which would been more than four times as bad as the country's previous post-war nadir.
Reuters