Germany’s Retail Sales Unexpectedly Declined in June

German retail sales unexpectedly declined in June, suggesting that doubts about Europe’s economic recovery weighed on consumer spending.

Sales adjusted for inflation and seasonal swings dropped 1.5 percent from May, when they rose 0.7 percent, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase of 0.2 percent, according to the median of 25 estimates in a Bloomberg News survey. Sales fell 2.8 percent from a year earlier.

Factory orders, industrial production and exports all declined in May. At the same time, the Ifo index of German business confidence rose for a third month in July and GfK SE said consumer confidence will climb to the highest level in almost six years in August. The Bundesbank said last week that economic growth will slow this quarter after a strong expansion in the three months through June.

“The second quarter is dominated by catch-up effects after a weak start into the year,” said Christian Lips, an economist at NordLB in Hanover. “Growth will slow down a bit for the rest of the year but the economy will definitely expand and Germany will remain the growth engine for Europe.”

Gross domestic product increased 0.1 percent in the first quarter after a 0.7 percent contraction in the final three months of last year. The Federal Statistics Office will publish its initial estimate for the second quarter on Aug. 14.

The Frankfurt-based Bundesbank last month cut its 2013 growth forecast for Germany to 0.3 percent from 0.4 percent and its outlook for next year to 1.5 percent from 1.9 percent. The European Central Bank estimates that the 17-nation euro-area economy will contract 0.6 percent this year and expand 1.1 percent in 2014.

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