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German retail sales disappoint in April

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(Globalpost/GlobalPost)

German consumers again held back on spending in shops in April, disappointing analysts who had forecast stabilisation following two months of declines, official data showed on Friday.

Retail sales fell by 0.4 percent in April compared with the level in March, provisional adjusted figures by the federal statistics office Destatis showed.

It was the third month running of declines following a drop of 0.1 percent in March and 0.8 percent in February. Analysts surveyed by Dow Jones Newswires had expected unchanged sales this month.

Household consumption is a key factor of growth in an economy, although in Germany the critical factor driving activity is exports.

Germany has come under pressure from lagging fellow members of the eurozone to take measures to boost consumer spending which would tend to pull in goods from elsewhere in Europe.

Natixis economist Paul Beaumont said the drop in retail sales "since February outweighs the massive rise in January" and for the four months to April retail sales were down 0.2 percent on the year.

"These figures present a mixed picture of the private consumption, which was expected to be more dynamic in 2013 as a consequence of low unemployment rates and rising consumer morale," the analyst said.

On a 12-month basis, however, retail sales increased by 1.8 percent in April, but that was partly because there were two more shopping days in April this year than in the same month last year, the statisticians noted.

Monthly retail sales data are volatile and subject to frequent revision.

Berenberg Bank economist Christian Schulz said that following a raft of positive news recently from the German consumer, "the moderate decline in retail sales in April makes for a slightly disappointing start to the second quarter."

But he pointed out that the data "have to be interpreted with caution: they are volatile and often revised significantly afterwards."

The early Easter break may have "overstated the March figure and understated April, but even taking account of such an effect, sales would have probably declined in both months," Schulz said.

Some of the weakness could be blamed on the late arrival of spring, with the cold weather pushing up prices for seasonal vegetables, an effect which could last into May.

Nevertheless, Schulz insisted that "the fundamentals for consumption in Germany remain strong. Unemployment and inflation are very low, real wages are rising thanks to more generous wage deals between unions and employers."

Newedge Strategy analyst Annalisa Piazza also said that recent consumer confidence indicators, such as the GfK barometer "clearly point in the direction of further strength in consumer spending."

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http://www.globalpost.com/dispatch/news/afp/130531/german-retail-sales-disappoint-april