Bloomberg News

German Consumers Defied Christmas Season as Retail Sales Fell

February 01, 2012

Jan. 31 (Bloomberg) -- German retail sales unexpectedly declined in December as consumers’ Christmas-shopping frenzy was damped by uncertainty about the economic outlook.

Sales, adjusted for inflation and seasonal swings, declined 1.4 percent from November, when they fell 1 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 0.8 percent, the median of 24 estimates in a Bloomberg News survey showed. Sales fell 0.9 percent from a year ago. The statistics office said retail sales were 0.9 percent higher in 2011 than in 2010.

Metro AG, Germany’s largest retailer, said on Jan. 17 fourth-quarter revenue fell 1.3 percent amid a “disappointing” Christmas season. Bundesbank President Jens Weidmann said last week the German economy, Europe’s largest should return to robust growth this year after a “temporary weak phase.”

“The economy should pick up in the second quarter,” said Gerd Hassel, an economist at BHF Bank AG in Frankfurt, who forecasts a 0.5 percent expansion in 2012. “Private consumption will continue to boost growth this year, albeit at weaker pace than in 2011 because increases in employment and wages will be more moderate.”

The decline in German unemployment to its lowest since 1992 may slow as companies struggle to find workers for 1 million open jobs amid a shrinking population, Labor Minister Ursula von der Leyen said in an interview on Jan. 25.

Germany’s statistics office said on Jan. 11 the economy probably shrank “roughly” 0.25 percent in the final three months of last year. While growth slowed to 3 percent in 2011 from 3.7 percent in 2010, the contribution of private consumption doubled, adding 0.9 percent to gross domestic product last year, up from 0.4 percent.

Consumer confidence will rise for a fifth month in February as unemployment holds at a two-decade low, boosting the economic outlook and households’ willingness to spend, GfK SE said on Jan. 26.

--Editors: Matthew Brockett, Simone Meier

To contact the reporter on this story: Jana Randow in Davos, Switzerland at jrandow@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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