German retail sales unexpectedly rose in April, raising hopes that consumer spending could help support the economy after a record slump in gross domestic product in the first quarter, official data showed today.
Sales rose by 0.5 per cent from the previous month in real and seasonally adjusted terms, the Federal Statistics Office said - the strongest increase since December. A Reuters poll had forecast sales would be unchanged on the month.
German GDP contracted by 3.8 per cent in the first three months of 2009 but private consumption took some of the edge off the blow, rising by 0.5 per cent quarter-on-quarter, boosted by a government subsidy to encourage car buying.
“Today's numbers give some hope that private consumption could cushion the downswing of the German economy even once the (government) car scrap scheme has been fully utilised,” said Carsten Brzeski, an economist at ING financial markets.
However, worries about the retail sector remain as Germany battles its sharpest recession since World War Two.
Unemployment rose for the seventh month running in May, and hundreds of thousands of workers are now on shortened hours.
Firms are feeling the heat from the crisis, with retail and tourism group Arcandor now in talks with the government in a bid to secure millions of euros in state aid.
The government expects Europe's largest economy to contract by six percent this year, and some observers are even more pessimistic. Nevertheless, latest forward-looking indicators have suggested the slump could be bottoming out.
The Statistics Office also said German March retail sales had been revised up to show a drop of 0.4 per cent on the month. It had originally reported a monthly decline of 1 per cent.
“So far, German consumers have been the positive surprise during the recession. Consumer confidence has been stable for several months. Now, it looks as if consumers are finally putting their money where their mouth is," said Brzeski.
Year-on-year, April sales fell by 0.8 per cent in real terms. In nominal terms, sales were up by 0.9 per cent month-on-month and down by 0.9 per cent on the year.
Reuters