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German Retail Sales Unexpectedly Fell a Second Month in February

German Retail Sales Unexpectedly Fell a Second Month in February
Pedestrians pass retail stores as they walk through a shopping area in Bochum, Germany. Photographer: Hannelore Foerster/Bloomberg

German retail sales unexpectedly declined for a second month in February as rising energy prices sapped household purchasing power.

Sales, adjusted for inflation and seasonal swings, fell 1.1 percent from January, when they declined 1.2 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 1.1 percent, the median of 18 estimates in a Bloomberg News survey showed. Sales rose 1.7 percent from a year ago.

German consumer confidence will decline for the first time in seven months in April as rising energy costs bite and the region’s sovereign debt crisis persists, market research company GfK SE predicted this week. Still, unemployment fell to a fresh two-decade low of 6.7 percent this month and business confidence unexpectedly rose to an eight-month high.

“Weak retail sales data shouldn’t be overestimated,” said Jens Kramer, an economist at Nord LB in Hanover. “The labor market is in excellent shape, inflation will come down and robust wage increases lie ahead. Going forward, private consumption will support the economy markedly.”

IG Metall, Europe’s biggest trade union representing 3.6 million workers, is demanding a 6.5 percent wage increase.

With the debt crisis damping demand for German exports, economic growth will slow to 0.6 percent this year from 3 percent last year before accelerating to 1.8 percent in 2013, according to the Bundesbank.

Metro AG, Germany’s biggest retailer, forecast unchanged earnings this year after the debt crisis contributed to a 13 percent drop in fourth-quarter profit.

Hugo Boss AG’s Chief Executive Officer Claus-Dietrich Lahrs said in an interview on March 14 that “the first 2 1/2 months of 2012 have been very satisfactory.” Operating profit may rise by more than 10 percent this year as revenue increases, the Metzingen, Germany-based luxury clothing maker said.

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