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German Retail Sales Unexpectedly Dropped in December

German retail sales unexpectedly declined for a second month in December.

Sales, adjusted for inflation and seasonal swings, fell 0.3 percent from November, when they dropped a revised 1.9 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 2 percent gain, the median of 15 estimates in a Bloomberg News survey shows. From a year earlier, sales declined 1.3 percent.

German economic growth probably slowed to 0.5 percent in the fourth quarter from 0.7 percent in the third, the statistics office said on Jan. 12. Still, unemployment fell by 262,000 people in 2010, lowering the jobless rate to 7.5 percent last month from 8.1 percent a year earlier. German consumer confidence will rise to the highest in more than three years next month, research company GfK AG said last week.

“Retail sales data are pretty volatile and a decline won’t change the broader picture,” said Mario Gruppe, an economist at NordLB in Hanover, Germany. “There’s reason for optimism that domestic demand will sustainably contribute to growth this year.”

In 2010, retail sales rose 1.2 percent from the previous year, the statistics office said.

‘Respectable Rise’

Hugo Boss AG, the German luxury clothier, said on Jan. 18 it expects “continued growth” in 2011 after a “record year” in 2010. Douglas Holding AG, Europe’s largest makeup and perfume retailer, said earlier this month that fourth-quarter sales increased as Germans boosted spending at the company’s bookstores and Christ jewelry outlets.

“For the time being, the tailwinds from the dynamic economic upswing and especially from the solid labor market prevail,” said Alexander Koch, an economist at UniCredit Group in Munich. “All in all, we keep our view that 2011 will bring a respectable rise in private spending.”

The Bundesbank forecasts economic growth will slow to 2 percent this year from a record 3.6 percent in 2010. Business confidence rose to a record in December and GfK’s gauge of consumers’ willingness to spend surged to 41.8 in January from 33.8 in the previous month.

“The German economy is gaining a second pillar of support in addition to exports and, hence, isn’t exclusively reliant on the success or failure of foreign trade,” the research company said.

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