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German retail sales fell unexpectedly in September, preliminary data showed on Friday, in a sign consumers are holding back on purchases despite relative stability in the labour market.
Figures from the Federal Statistics Office showed sales fell 0.5 percent month-on-month in real terms and declined by 3.9 percent on the year. The annual fall was the fifth consecutive decrease.
A breakdown of the annual data showed households in Europe's largest economy were holding back on a broad range of purchases, with online and mail order items down 10.3 percent in real terms and clothing and food also declining.
"The economic boost from private consumption is running out. Consumption will no longer contribute positively to growth. The conditions for retail are difficult," said economist Lothar Hessler from HSBC Trinkaus.
The mid-range forecast of analysts polled by Reuters was for retail sales to rise by 0.6 percent on the month and to decrease by 2.5 percent year-on-year.
Germany pulled out of its sharpest post-war recession in the second quarter, and senior policymakers have said growth likely accelerated in the third quarter.
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Sharon Lorimer |
However, government stimulus has played an important hand in this, and participants at a meeting of Merkel's conservatives last week said she believed the economy was heading for "extremely serious months" in early 2010.
Unemployment has been largely kept in check in Germany by a subsidy scheme known as "Kurzarbeit," which encourages firms to shift employees to part-time work rather than fire them.
Joblessness fell unexpectedly in October for a fourth straight month, data showed on Thursday, as government measures to prevent layoffs supported the labor market.
However, most economists expect unemployment to rise steadily over the course of 2010 as companies, which are operating well below full capacity, pare back their workforces.
In nominal terms, retail sales fell 0.5 percent month-on-month and decreased 4.8 percent on the year, the Office said.
In the first nine months of 2009, sales were down by 2.2 percent in real terms year-on-year. The figures were based on sales data from seven states accounting for around 76 percent of retail activity in Germany.
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