German retail sales post surprise drop in March: statistics

4th May 2010, Comments 0 comments

German retail sales posted a surprise drop in March, bringing the first quarter figure back to its level of early 2009, official data showed on Tuesday.

Retail sales in the biggest European economy plunged by 2.4 percent from the previous month, the national statistics office Destatis said, well below expectations for a slight decrease of 0.2 percent.

They returned to the level seen in the first quarter of 2009, when Germany was in the depths of its worst post-war recession.

On an annual basis, retail sales were 0.8 percent lower than in March 2009, Destatis said.

The data strengthened forecasts that the German economy could record a first quarter contraction when growth figures are published on May 12.

In late April however, a survey by the GfK economic research group found that German consumer confidence had risen, owing to signs that activity was picking up.

Unemployment also fell in April to 8.1 percent of the workforce after warm weather began to nurture an economic recovery.

Germany has avoided a major increase in unemployment by partially subsidising shorter working hours, but consumers are still not spending and consumption has remained the economy's weak link.

Last week, the head of the German retail giant Metro, Eckhard Cordes, deplored the fact that "in Germany, whether we have growth of zero or three percent, household consumption is almost always the same."

Many of Germany's neighbours have also said the government has not done enough to encourage stronger consumption, contributing to repeated trade surpluses with its eurozone partners.

© 2010 AFP

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