German retail sales fall surprise 2.3 percent in September

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German retail sales in September fell 2.3 percent from August in the sharpest monthly drop since March 2008, official data showed on Friday.

The downturn followed a monthly decline of 0.4 percent in August and signaled that the German recovery and falling unemployment might not generate stronger consumption -- the key to a sustained recovery.

The September outcome contrasted starkly with analyst forecasts for a 0.4 percent rise as compiled by Dow Jones Newswires.

In the first nine months of the year, retail sales gained 1.1 percent compared with the same period in 2009, when Germany began to pull out of its worst recession in six decades.

Berlin has more than doubled its growth forecast for 2010 to 3.4 percent and expects Europe's biggest economy to expand by another 1.8 percent next year.

The Destatis statistics office said sales of of food, drink and tobacco nonetheless fell 3.5 percent on an annualised basis in September, while non-food sales gained 3.1 percent.

The data does not include sales of automobiles or petrol.

ING senior economist Carsten Brzeski called the figures, based on 16 German states that represent 76 percent of sales, a "consumption setback."

Although German retail sales data are notoriously volatile, Brzeski said the "numbers are a clear disappointment, illustrating that the way towards a fully self-sustained recovery is not an easy one."

Germany has rebounded from its recession mainly on the strength of exports and the economist added: "For third quarter growth, the fate of the German economy is back in the hands of industry."

© 2010 AFP

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