German retail sales increased for a second straight month in April as unemployment at a two-decade low and rising wages bolstered household purchasing power.
Sales, adjusted for inflation and seasonal swings, rose 0.6 percent from March, when they advanced 1.6 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 0.2 percent, the median of 27 estimates in a Bloomberg News survey showed. Sales dropped 3.8 percent from a year ago.
Falling unemployment and a growing economy are helping German workers win bigger pay increases, boosting the outlook for household spending. Still, Europe’s escalating sovereign debt crisis may weigh on sentiment. German consumer confidence will hold steady in June after declining this month, the GfK market research company said on May 25.
“Private consumption is benefiting from the still positive development in the labor market and recent salary gains,” said Jens Kramer, an economist at NordLB in Hanover, Germany. “Lower inflation rates also mean that consumers have more to spend in real terms.”
Inflation, calculated using a harmonized European Union method, slowed to 2.1 percent in May, a 16-month low, on declining energy prices. German unemployment probably held at 6.8 percent in May, according to a Bloomberg survey of economists. The Federal Labor Agency will publish that report at 9:55 a.m. in Nuremberg today.
Douglas Holding AG (DOU), the German cosmetics retailer, on May 9 reported a 2 percent increase in sales in the seven months through April, led by demand in its home market.
German business confidence nevertheless fell more than economists forecast in May as speculation that Greece might leave the euro area clouded the economic outlook.
The Munich-based Ifo institute said on May 24 its business climate index, based on a survey of 7,000 executives, dropped to 106.9 from 109.9 in April. That was the steepest decline since August, when the region’s debt crisis spread to Italy and Spain, and below all 37 estimates in a Bloomberg News survey of economists. The median forecast was for a decrease to 109.4.
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