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German Retail Sales Unexpectedly Fell in July as Economy Weakens

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Aug. 31 (Bloomberg) -- German retail sales unexpectedly declined in July as the sovereign debt crisis curbed growth in Europe’s largest economy.

Sales, adjusted for inflation and seasonal swings, slipped 0.9 percent from June, when they rose a revised 0.5 percent, the Federal Statistics Office in Wiesbaden said today. That’s the strongest increase since March. Economists forecast a gain of 0.2 percent, according to the median of 15 estimates in a Bloomberg News survey. Sales fell 1 percent from a year earlier.

While the jobless rate in Germany remained at 6.8 percent in August, unemployment edged higher for a fifth month as Europe’s debt crisis weighs on growth and corporate earnings. Still, Europe’s largest economy is outperforming most of its euro-region peers as rising wages bolster purchasing power and consumption.

“The situation on the labor market in Germany is deteriorating,” said Matthias Thiel, an economist at M.M. Warburg & Co. in Hamburg. “On the other hand, higher wages and the high level of private consumption have a stabilizing effect on the economy.”

The statistics office said it exchanged about 9,800 companies representing 33 percent of the sample it uses to calculate the monthly retail sales statistics in July.

Metro AG, Germany’s biggest retailer, on July 31 posted second-quarter profit that beat analysts’ estimates as sales rose in its home market and at its Cash & Carry and Media-Saturn units.

Cooling Economy

While the outlook for private consumption remains “favorable,” the Bundesbank said on Aug. 20 that the economy may cool further as a result of the region’s fiscal crisis.

German growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first as companies postponed investments. The number of people without a job increased a seasonally adjusted 9,000 in August.

Siemens AG said on Aug. 27 it will cut 500 jobs at its German factories making industrial gear boxes and clutches by 2016, citing slack demand. Europe’s largest engineering company said last month reaching its full-year earnings goal has become harder after profit and sales fell short of analysts’ estimates.

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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