[BERLIN] German retail sales fell unexpectedly on the month in October, but a solid rise on the year strengthened expectations that private consumption will remain a key growth driver for Europe's largest economy in the final quarter of the year.
Retail sales, a notoriously volatile indicator often subject to revision, inched down 0.4 on the month in real terms in October after stagnating the previous month, the Federal Statistics Office said on Monday. That was below the Reuters consensus forecast for a 0.4-per cent rise.
On the year, retail sales climbed by 2.1 per cent, missing the consensus forecast for a 2.9-per cent rise.
From January to October, retail sales increased by 2.8 per cent in real terms compared with the same period last year - the strongest increase since 1994. "People keep spending money because their job situation is good, and the record-influx of refugees also increases demand,"an official at the Statistics Office said.
German consumers are benefitting from record employment, rising wages and nearly stable prices while low interest rates are giving them little incentive to save and cheap energy is freeing up additional cash for spending.
A survey showed last week that morale among German consumers declined less than expected running into December with the willingness to buy even improving, in a sign that Christmas shoppers are prepared to open their wallets.