German retail sales stable in January

German retail sales were stable in January compared with the level in December, figures from the national statistics office showed yesterday, raising hopes that consumption might begin to rebound.

Retail sales fell, however, by 3.4 per cent from January 2009 in the biggest European economy, the Destatis office added.

Destatis said in a separate statement that average gross earnings of all German workers fell by 0.4 per cent to around €27,648 in 2009, the first decline in 60 years.

Shorter work hours that were only partially compensated by the government were a key factor in the decline, Destatis added.

A survey of consumer confidence by the GfK research institute has also shown that Germans have added concern over the Greek debt crisis to worries about unemployment, with that poll falling in March for the fifth month running.

German unemployment edged higher to 8.7 per cent of the workforce in February as a total of 3.643 million people were without jobs.

Analysts were moderately surprised by the retail sales data, with ING senior economist Carsten Brzeski saying: "At least to some extent, German consumers defied the harsh winter weather" that froze work on construction sites.

Once conditions on the labour market improve, an increase in real wages "could take the upper hand over cautionary savings, returning private consumption into positive territory," he forecast.

For UniCredit's Alexander Koch, the better than expected figures along with a strong rebound in car sales in January meant consumption might begin to underpin growth in German gross domestic product.