German retail sales rose more than expected in June, jumping 6.3 per cent on a monthly basis in real terms, preliminary data from the federal statistics office showed.
On an annual basis, the notoriously volatile indicator fell 1.0 per cent. Economists polled by Reuters had been expecting a 1.6 per cent increase month-on-month and a 1.8 per cent drop year-on-year.
The stronger-than-expected monthly rise may have been due to distortions arising from a rare calendar arrangement, the office said by telephone, as June this year had two fewer shopping days than June 2010, while May had three more than last year.
"After the latest data disappointments, German retail sales are a welcome positive surprise," said Carsten Brzeski at ING, warning nevertheless not to get "overly excited" due to "the rather discouraging track record of German retail sales".
Low unemployment and solid wage increases are expected to support German consumption in 2011, but rises in inflation have surfaced in consumer sentiment surveys and could weigh on spending in the coming months.
Economic sentiment in the euro zone worsened more than expected this month with optimism fading in all sectors, data showed yesterday.
In Germany, preliminary data showed earlier in the week that consumer price inflation rose to 2.4 per cent in July, suggesting Friday's reading for the whole euro zone could exceed the 2.7 per cent forecast by economists - well above the European
Central Bank's target of close to but below 2 per cent.
Recent results from Germany's industrial heavyweights may support this view. Carmakers Daimler and Volkswagen gave an upbeat outlook for the rest of the year when reporting earnings this week.
On the other hand some German retailers are already feeling the pain. Europe's largest electronics retailer, MediaMarkt-Saturn, reported a second-quarter loss, also due to a drop in sales in Germany and start-up losses in China, majority owner Metro said.
And German DIY store operator Praktiker reported lower-than-expected sales for the second quarter, hurt by an 11.2-per cent slump at its eponymous brand in Germany.
The retail sales data, ING's Brzeski said, were at the very least a sign the economy was not headed for a sharp downturn.
"Consumers offer some glimmer of hope that at least the German economy is heading towards a soft, not hard, landing," he said.
Reuters
