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German Retail Sales Jump Most in Almost Three Years

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Dec. 1 (Bloomberg) -- Retail sales in Germany rose the most in almost three years in October as falling unemployment prompted households to step up spending.

Sales, adjusted for inflation and seasonal swings, jumped 2.3 percent from September, when they declined 1.8 percent, the Federal Statistics Office in Wiesbaden said in an e-mailed statement today. That’s the biggest increase since January 2008. Economists had forecast a 1.2 percent gain, the median of 20 estimates in a Bloomberg News survey showed. In the year, sales declined 0.7 percent.

German unemployment fell to an 18-year low last month, widening the gulf between Europe’s biggest economy and peripheral nations struggling to cut their budget deficits. Rising payrolls in Germany are bolstering domestic demand and putting the economic recovery, which has been relying on exports, on a firmer footing.

Today’s data “brought strong evidence of a further broadening of the recovery,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “Strong October retail sales should have been the prelude to a smashing Christmas shopping season.”

German retailers are enjoying a “dream start” to the Christmas period, the HDE industry federation said on Nov. 29. Consumer confidence will rise to its highest level in more than three years in December, market research company GfK said last week.

Germany’s Puma AG, Europe’s second-largest sporting-goods maker, on Oct. 26 said third-quarter profit rose 14 percent and raised its 2010 forecasts for sales and profitability.

With Germany’s economic recovery showing few signs of cooling, workers may benefit from earlier pay increases. MAN SE will bring forward a 2011 raise after saying on Nov. 24 it will increase salaries in Germany by 2.7 percent as early as February.

Domestic demand is “increasingly aiding the economy,” which may grow more than 3 percent this year, the Bundesbank said on Oct. 18.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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