German retail sales rise in December

German retail sales edged up in December after falling more than twice as much in November, data showed today, suggesting the…

German retail sales edged up in December after falling more than twice as much in November, data showed today, suggesting the struggling sector made little ground in the final months of last year.

Real retail sales rose 0.8 per cent month-on-month but declined 2.5 per cent on an annual basis, preliminary data from the Federal Statistics Office showed, confirming Reuters consensus forecasts.

"Private consumption seems to be caught in a zig-zag pattern without getting to a real upward trend," said Carsten Brzeski from ING Financial Markets.

German private consumption slumped in the third quarter after driving growth in the April-June period on the back of a government cash-for-clunkers car scheme that is now exhausted.

For many retailers, the last three months of 2009 provided little lift from the third quarter, with leading company Metro last month reporting a 3.4 per cent fall in fourth-quarter sales.

Disappointment over the Christmas season was not confined to Germany. In Britain, retail sales undershot expectations in December despite strong trading reports from most retailers over the crucial period.

Economists now expect weakening household spending to weigh on growth in Germany, Europe's largest economy, despite Chancellor Angela Merkel's coalition government passing a tax relief package for this year.

"In 2010 we will see a significant drop in private consumption. Unemployment will rise in the coming months. The outlook is not very rosy for retail sales," said Alexander Koch at Unicredit. "In the short-term, sales will likely fall further and a stabilisation will probably follow late in the year."

In nominal terms, sales rose 0.8 per cent month-on-month in December and declined for an eighth straight month year-on-year, falling 1.8 per cent.

For the full year, sales were down 1.8 per cent in real terms compared to 2008 - an annual reading which the Statistics Office said was the worst since 2002.

Reuters