German retail sales slip further in July – statistics

German retail sales slipped again in July on a monthly basis, official data showed yesterday, suggesting that consumers in Europe’s biggest economy have not given up their thrifty ways.

Retail sales edged 0.3 per cent lower, according to provisional figures released by the national statistics office, the same as a revised loss in June.

The Destatis office had initially estimated the June decrease as a larger 0.9 per cent however.

But analysts polled by Dow Jones Newswires had forecast a July increase of 0.5 per cent.

Barclays Capital economist Thorsten Polleit called the July data “disappointing - given the latest improvements in the GfK consumer sentiment index and, perhaps more importantly, the overall labour market situation.” On an annual basis meanwhile, retail sales in the biggest European economy gained 0.8 per cent, the Destatis data showed.

German shoppers were thus still reticent to spend as the economy pursues its economic rebound thanks to strong performances by exporters and business investment.

Consumer sentiment has also improved and unemployment is now close to a two-year low point, but the stores have not seen many major benefits so far.

“Today’s numbers are a painful reminder that the German route towards a self-sustained recovery will not be an easy one,” ING senior economist Carsten Brzeski said.

In the first seven months of the year however, retail sales did gain 0.9 per cent from their level in the same period of 2009.

The medium-term measure is considered more reliable furthermore than monthly data, which are often revised later on.

In the second quarter of the year, domestic consumption gained a healthy 0.6 per cent as the economy posted record quarterly growth of 2.2 per cent.

Economists and the central bank expect the official 2010 German forecast of 1.4 per cent to be revised sharply higher in October.