German Retail Sales Unexpectedly Steady in July After Surge
German retail sales unexpectedly held steady in July after surging the most in more than three years the previous month.
Sales, adjusted for inflation and seasonal swings, were unchanged from June, when they jumped 4.5 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 1.5 percent decline, the median of 20 estimates in a Bloomberg News survey shows. Sales fell 1.6 percent in the year.
Falling unemployment and retreating energy costs have boosted household purchasing power even as a debt crisis in the euro region’s periphery and slowing global growth weigh on consumer confidence. The Bundesbank forecasts the German economy will expand about 3 percent this year as rising domestic demand helps compensate for a moderation in export orders.
“Unemployment is still declining but wages aren’t rising significantly so a consumption boom is rather unlikely,” said Ralph Solveen, head of economic research at Commerzbank AG in Frankfurt. “Exports are slowing as the global economy loses steam. Private consumption is becoming more important as a result, but I don’t see it becoming the driver of German growth.”
July had one trading day less than the same month last year, the statistics office said.
Hiring Versus Firing
Surging demand for cars is boosting hiring at German companies including MAN SE (MAN), Continental AG (CON) and Daimler AG’s Mercedes-Benz division. Unemployment is at 7 percent, the lowest since German reunification two decades ago.
Germany’s Bertelsmann AG, Europe’s largest media company, said today that profit attributable to shareholders in the first six months of the year increased 7.6 percent and sales rose 1.9 percent, driven mainly by the television and book publishing business.
Still, EON AG, Germany’s largest utility, will eliminate as many as 11,000 jobs after first-half profit plunged because of the cost of shutting nuclear reactors.
German growth almost ground to a halt in the second quarter, adding to signs that the risk of a renewed recession in the euro region is increasing.
German business and investor confidence plummeted this month on concern that Europe won’t be able to contain its debt crisis. Consumer sentiment will drop to a 10-month low in September, the GfK market research company said last week.
Bundesbank board member Andreas Dombret said on Aug. 25 the economic recovery in Germany and the euro area will continue, “albeit at a more moderate pace than before.” While markets have recently experienced turmoil, the underlying development of the real economy “is not as dire as these turbulences might suggest,” he said.
Germany’s Fielmann AG, Europe’s largest chain of optical stores, said on Aug. 24 that second-quarter net income rose 3.5 percent as customers bought more discount eyeglasses.
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