Bloomberg News

German Retail Sales Rose in September as Unemployment Declined

October 31, 2011

Oct. 31 (Bloomberg) -- German retail sales rose in September as an improving jobs market offset concerns about Europe’s sovereign debt crisis.

Sales, adjusted for inflation and seasonal swings, increased 0.4 percent from August, when they fell 2.7 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 1 percent, according to the median of 24 estimates in a Bloomberg News survey. Sales rose 0.3 percent in the year.

German unemployment fell for a 27th straight month in September, taking the jobless rate to 6.9 percent, the lowest since reunification two decades ago. Consumer confidence will increase for the first time in eight months in November on higher salaries and improving job prospects, the Gfk market research company predicted last week.

“The fundamentals of the German economy are still very strong and falling unemployment should support growth,” said Carsten Brzeski, an economist at ING Group in Brussels. “However, the crisis could scare Germans into holding on to their money.”

Bayerische Motoren Werke AG’s expansion of its 3-Series sedan production will secure 9,000 jobs at the carmaker and suppliers in Munich and the nearby region, Manfred Schoch, head of the company’s works council, said on Oct. 28.

Shares in Metro AG, Germany’s biggest retailer, rose on Oct. 20 after Chief Executive Officer Eckhard Cordes reiterated that 2011 earnings will exceed last year’s. The share price is still down 36 percent in 2011.

Debt Crisis

Stock markets reversed their rally on Oct. 28 on concern that Europe’s latest bailout package is not enough to solve the crisis. Europe’s leaders bolstered their crisis fighting toolbox on Oct. 27 with a deal that saw them boost the capacity of the region’s rescue fund and cajole bondholders into accepting a 50 percent write-down on Greek debt. The debt crisis started in Greece two years ago and is now threatening to tip the global economy into recession.

While Germany’s Bundesbank on Oct. 17 predicted “strong” growth in the third quarter due to a rebound in industrial production and private consumption, it said the outlook has deteriorated.

Germany’s top economic institutes on Oct. 13 cut their 2012 forecast for growth by more than half, though they said Europe’s largest economy will probably avoid recession. Growth will slow to 0.8 percent next year from 2.9 percent in 2011, they said in a bi-annual report commissioned by the government. In April, the group forecast 2 percent growth for 2012.

--With assistance from Jeff Black in Frankfurt. Editors: Matthew Brockett, Jones Hayden

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net


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