German retail sales fell unexpectedly in December, suggesting Europe’s debt crisis unsettled consumers during key Christmas trade, although economists said they expected the preliminary data to be revised upwards.
The notoriously volatile indicator fell 1.4 percent in real terms on the month, and 0.9 percent on an annual basis, data from the Federal Statistics Office showed. The indicator missed forecasts in a Reuters poll of economists for gains of 0.9 and 1.4 percent respectively.
“These numbers suggest Christmas business was disappointing for retailers,” said Commerzbank’s Ulrike Rondorf.
“But the statistics office data are often revised.”
“Retailers themselves were relatively optimistic, and private consumption remains, in our view, a supporting pillar of the economy.”
Germany’s HDE retail association has said retailers saw a strong finish to the Christmas season with turnover for the period expected to be 1.5 percent above year-ago levels
DIY stores operator Praktiker announced a surprise return to sales growth for its namesake German stores in November and December, while fashion house Gerry Weber said revenue in Germany jumped 28 percent in December.
Berenberg Bank economist Holger Schmieding said the December figures were “almost too bad to believe.”
“Anecdotal reports and consumer confidence simply do not confirm the news from these data,” he said, suggesting the Statistics Office may revise the figures upwards.
“Typically, at year end, retail sales get underreported a lot and usually revised up significantly,” he said.
Germany’s export-driven economy recovered quickly from the 2008/09 financial crisis, but the outlook has darkened as euro zone debt worries have begun to weigh on the real 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 neighboring export markets.
Consumer surveys however show that German consumers remain upbeat, suggesting private spending will weather bad news from the euro zone thanks to the solid domestic job market
Consumer morale rose unexpectedly to a 10-month high going into February, a survey showed last week.
“As long as the labor market is doing well, consumption will be strong,” Commerzbank’s Rondorf said.
German unemployment data is due later on Tuesday.
The Statistics Office revised downwards November retail sales to a fall of 1.0 percent on the month, from a previously reported decrease of 0.9 percent.
On an annual basis, it also revised sales downwards to a gain of 0.9 percent from 1.4 percent.