German retail sales unexpectedly fall in Jan

BERLIN - German retail sales fell unexpectedly in January, preliminary data showed on Friday, as a mild winter stifled spending in Europe's largest economy.

The notoriously volatile indicator fell 1.6 percent in real terms month-on-month, data from the Federal Statistics Office showed, missing forecast gains of 0.5 percent in a Reuters poll of 19 economists.

But the indicator was up 1.6 on an annual basis in real terms, well above a forecast of 0.2 percent.

"The January results are a disappointment. In the mild weather much less winter clothing and winter sports articles were sold," said economist Rainer Sartoris at HSBC Trinkaus.

"But consumption can improve during the year. The labour market is good and it looks as if wages could rise significantly," he said.

The results followed a significant upward revision of December's worse-than-expected retail sales.

Germany's export-driven economy bounced back quickly from the 2008/9 financial crisis, but worries about the euro zone debt crisis have cast a shadow on Europe's bulwark economy.

Many economists expect at least one quarter of contraction in Germany as global demand falls and the region's debt crisis affects its key neighbouring export markets. The German economy shrank by 0.2 percent in the fourth quarter on sagging exports and private consumption.

But a solid job market has helped prop up spending and consumer surveys remain upbeat.

Consumer confidence hit a one year high going into March, and January's better-than-expected year-on-year retail sales point to private consumption as a bright spot that can weather bad news.

"Sales were higher than last year. At that time we were seeing an economic boom, now we are seeing a dip in growth," said Christian Schulz, an economist at Berenberg Bank.

"That shows the resilience of private consumption, which could stabilise the economy during the winter weak spot. Because of low unemployment rates consumption will be a support to growth."

The Statistics Office upwardly revised December retail sales to a rise of 0.1 percent on the month, from a previously reported decrease of 1.4 percent. On an annual basis sales were also upwardly revised, to a gain of 0.3 percent from a 0.9 percent drop.

By Alice Baghdjian


(Additional reporting by Alexandra Hudson; Writing by Alice Baghdjian)