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Retail sales up in April

AFP · 29 May 2009, 16:07

Published: 29 May 2009 16:07 GMT+02:00

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Analysts had expected retail sales, adjusted for calendar and seasonal effects, to slip by 0.1 percent on the month, in part because a goverment car scrapping bonus is believed to have undercut sales of other big-ticket items.

If consumption continues to improve in coming months, it could attenuate to some extent a contraction in Europe's biggest economy, which is in the midst of its worst recession since World War II.

"Consumer sentiment has edged slightly higher in the second quarter when compared to the first quarter, suggesting that private consumption will be up again ... though certainly not enough to offset the weakness from exports and investment," said Goldman Sachs economist Dirk Schumacher.

On an annual basis however, retail sales fell by 0.8 percent, according to data compiled by the national statistics office from seven German states that account for roughly 76 percent of all sales.

The figures do not include sales of automobiles and petrol.

"Sales have been actually quite robust given that the car wreckage scheme has probably 'crowded out' spending power," Schumacher said.

The latest index of German consumer confidence showed little change meanwhile, the GfK institute said Tuesday, and has been essentially stable since March.

Other analysts warned that German consumption remained on a downward trend and said rising unemployment would limit any contribution to overall economic growth.

The rise in April retail sales "cannot be expected to mark the start of a sustained recovery," UniCredit economist Alexander Koch said.

Story continues below…

Pessimistic forecasts by retailers and "the chronically subdued consumer climate indicate at best sluggish retail sales ex cars in the months to come."

Simon Junker at Commerzbank said: "German retail is still on a downward trend and set to show further setbacks in the coming months."

That was in part because "the situation in the labour market will deteriorate well into next year and this will put pressure on wages."

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