Retail Sales In Germany Fall Unexpectedly

German retail sales dropped surprisingly in August, as economists question whether or not weak private consumption in the country will show a strong recovery.

According to the office of the federal statistics, sales (adjusted for seasonal changes and inflation) dropped by 0.2 percent from July, and were 2.2 percent higher from the previous year.

Some economists argue that even though the data is extremely volatile and frequently revised, sales were unsatisfactory and spending remained sluggish in the country.

Carsten Brzeski, who is an economist at Brussels’ ING Bank, said that retail sales of August didn’t bring further proof of any upswing in private consumption. He further added, “Despite the continuous strengthening of the labor market, improving consumer confidence and even increasing willingness to spend, German consumption is not really starting up... Looking ahead, the ingredients are still there to further stabilize private consumption. Employment growth and wage increases should be the main drivers. Nevertheless, today's numbers are a painful reminder that traditional savers and bargain hunters cannot easily be turned into big spenders”.

Other economists tried to play down the data. "We are not really worried by this regarding significant volatility in monthly changes—year-on-year, the growth rate as per August is [up] 2.2 percent”, explained Robert Greil, an economist who works for a private bank called Merck Finck & Co.

The sales figure for August is the second monthly decline in a row and differs from the expected rise of 0.5 percent, which was predicted by analysts surveyed by Dow Jones Newswires.