German Retail Sales Decline in October

German retail sales declined slightly in October, confounding expectations of rising consumer sentiment, according to government figures released Thursday.

Sales declined by 0.2% from September to October adjusted for calendar and seasonal effects, the Federal Statistics Office said. Compared with October 2005, sales declined by 0.8%.

The figures follow a sharper drop in September, but economists surveyed by Dow Jones Newswires had forecast a much stronger performance, predicting an increase of 1.5%.

The outlook for German retailers has appeared to improve recently after years in which consumers' reluctance to spend amid persistently high unemployment dragged on the economy.

Earlier this week, a survey by the GfK research group showed German consumer confidence edging up to a new five-year high as shoppers eye purchases ahead of a planned January increase in value-added tax.

Thursday's figures did show an improvement in October in sales of household appliances and home improvement products, which were up a strong 4.6% on the year. Sales of clothes, shoes and other textiles also gained 1%.

However, the Federal Statistics Office said lower purchases of food, drinks and tobacco, which fell 3.9% from a year earlier, led the overall decline.

The agency's estimate was based on data from six of Germany's 16 states, which account for nearly three-quarters of the country's retail sales.