German retail sales fell by a bigger-than-expected 0.4 per cent month-on-month in February, suggesting that private consumption will drag on the export-fuelled recovery of Europe's largest economy.
In real terms, sales declined for a tenth straight month on an annual basis, falling 0.9 per cent year-on-year, data from the Federal Statistics Office showed today.
The preliminary figures compared with the Reuters consensus forecasts for a fall of 0.1 per cent on the month and an annual drop of 1.0 per cent.
"Households are still being cautious about what they spend," said economist Klaus Schruefer at SEB. "There's no cause for overconfidence on the outlook for private consumption."
The HDE retail association confirmed last week its forecast for sales to stagnate in nominal terms and to fall 0.5 per cent in real terms this year.
Germany pulled out of recession in the second quarter of 2009 but the economy stalled in the fourth.
Indicators covering the first quarter have suggested the economy struggled to grow at the start of the year, but the latest forward-looking surveys point to a more durable upturn.
The retail industry is highly dependent on conditions in the labour market and tends not to feel the benefit of an economic recovery until domestic industries pick up.
"There is quite a lot of uncertainty about the labour market. Moreover, 800,000 people were still on reduced hours in the first quarter, which has cut back disposable income," said Mr Schruefer.
Data on yesterday showed that unemployment fell unexpectedly in March, posting its biggest drop since June 2008, which could help bolster retail sales in coming months.
In nominal terms, sales were unchanged month-on-month and fell 0.5 per cent year-on-year.
The data were based on sales on seven states accounting for some 76 per cent of total retail turnover.
Reuters