Berlin - German retail sales unexpectedly rose for the third
consecutive month in May, the nation's statistics office said
Wednesday.
Adjusted for inflation and seasonal swings and excluding car
sales, retail sales in Europe's biggest economy rose 0.4 per cent
month-on-month in May as dwindling inflation and hopes that the
recession might be easing encouraged German consumers to open up
their wallets.
'Private consumption in the second quarter is bound to surprise
many pessimists,' said ING Bank economist Carsten Brzeski.
Analysts had forecast that retail sales would come in flat in May
after posting a 0.5-per-cent increase in April. However, year-on-year
retail sales fell 2.9 per cent in May.
But with car sales buoyed by a bonus scheme for consumers
scrapping old model vehicles in favour of more environmentally sound
vehicles, the May retail sales data points to private consumption
having turned in a solid performance in recent months.
As a result, private consumption could help to compensate for the
dramatic slump in German exports following the implosion of world
trade this year.
The publication of the latest retail data also follows the release
of figures pointing to the German labour market managing to weather
the global economic storm better than forecast.
While the Federal Labour Agency said Tuesday that seasonally
adjusted unemployment climbed by 31,000 this month, in the
politically important unadjusted terms the numbers out of work fell
by 48,000.
Analysts had forecast a 45,000 rise in the seasonally adjusted
unemployment, which reflects overall trends in the job market.
But analysts also say that the prospects of layoffs mounting in
Germany towards the end of the year as the global economic downturn
catches up with the nation's labour market could cast a shadow over
private consumption in the coming months.
Indeed, economic forecasters are expecting the German economy to
contract by a dramatic 6 per cent plus this year.
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