German retail sales declined unexpectedly in March, falling for two of the first three months of the year and acting as a drag on growth over the period, preliminary data showed today.
The 2.4 per cent month-on-month fall in real terms was far below the expectations of economists polled, who had expected a flat reading on the month.
"The March drop illustrates once again a sad pattern of German private consumption: the end-of-season sale hangover," said Carsten Brzeski at ING Financial Markets.
"Almost every year, retail sales get a hit after the traditional German winter sales have ended," he said.
On an annual basis however, the Federal Statistics Office said March sales were up 2.7 per cent, ending 10 months of year-on-year decline and posting a reading far above the 0.6 per cent drop that had been forecast.
Germany exited its deepest post-war recession in the second quarter of last year but the recovery stalled through the winter when harsh weather disrupted business activity.
Recent surveys however, suggest the economy is picking up steam again. Business morale surged in April to its highest level in nearly two years, surpassing even the most optimistic forecast.
The two indicators that offer the best guide to consumer spending going forward suggest a positive outlook, although it is unclear to what extent that will lead households to spend.
Last week, the GfK market research group's survey of German consumer sentiment - a barometer for worries over the labour market - showed morale is likely to rise to a six-month high in May as households' view of the economy and income expectations brighten.
That figure was backed up two days later by upbeat jobless figures that showed unemployment fell far more than expected in April, declining for a 10th consecutive month.
The March retail data were based on sales in seven states accounting for some 76 per cent of total retail turnover.
In nominal terms, sales fell 1.8 per cent month-on-month and were up 3.9 per cent year-on-year.
Reuters