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German retail sales end 2015 on a weak note

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German retail sales dipped in December, marking a weak end to the year and suggesting private consumption, which has been a pillar of support for Europe's largest economy, could lose steam in the fourth quarter.

[BERLIN] German retail sales dipped in December, marking a weak end to the year and suggesting private consumption, which has been a pillar of support for Europe's largest economy, could lose steam in the fourth quarter.

Retail sales, a notoriously volatile indicator often subject to revision, were down by 0.2 per cent month-on-month in real terms after climbing by a revised 0.4 per cent the previous month, the Federal Statistics Office said on Friday. Economists polled by Reuters had expected a 0.5 per cent rise.

Andreas Scheuerle, an economist at Dekabank, said mild weather had probably taken its toll on retail sales because consumers did not want to buy winter goods due to the spring-like temperatures experienced in December.

"This means that in the fourth quarter the German economy's support - private consumption - probably weakened slightly. Either production or exports need to perform well in December to bring quarterly growth towards 0.25 per cent," he said.

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The Statistics Office is due to publish preliminary fourth-quarter gross domestic product (GDP) data on Feb 12. Earlier this month, it said GDP likely grew by 1.7 per cent in 2015, meaning growth of around 0.25 per cent in the fourth quarter, compared with 0.3 per cent in the third.

The annual retail sales comparison was more encouraging, showing a 1.5 per cent rise compared with December 2014, but that still missed the consensus forecast for a 2.0 per cent increase.

Nonetheless, the outlook for household spending remains bright as German consumers revel in record-high employment and rising wages at the same time as low interest rates discourage them from saving. Consumption is expected to support growth this year.

REUTERS

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