Real, seasonally adjusted retail sales:

August: -2.9% m/m, +2.2% y/y

MNI survey median: -0.2% m/m, -0.6% y/y
MNI survey range: -1.2% to +1.2% m/m

July: +0.3% m/m, -1.8% y/y (revised from +0.3%/+1.3%)

FRANKFURT (MNI) – German retail sales fell more sharply than
expected in August to their lowest level since May, the Federal
Statistical Office reported on Friday.

After rising 4.3% over June and July, sales declined 2.9% on the
month in August, but were still 2.2% higher on the year.

Disaggregating the main figure, food, drink and tobacco sales were
up 2.2% in real terms y/y, while non-food sales increased 2.5% over the
same period.

Taking July and August together, sales were still 0.8% higher than
in 2Q, which in turn was down 0.4% compared to the previous period.

With economic activity set to slow further in the near, households
are likely to reduce their non-essential purchases.

However, the continued strength of the labour market could
partially offset the effects of lowered economic expectations. A recent
European Commission survey showed that Germans’ likelihood of making
major purchases now and in the near future both remain above their
respective averages.

Nevertheless, an increase in thrift among shoppers was blamed for
the fall in the German retail PMI in September to 53.9, which brought
the average for 3Q to its lowest level since the third quarter of 2010.

An Ifo institute survey showed a modest rebound in retail morale
this month, with both their current business situation and their
prospects for the coming year viewed more positively.

The ongoing debt crisis, however, could soon change that.

Consumers willingness to spend suffered a moderate decline in
September, the GfK Group said. While the indicator remains at “an
extremely good level,” GfK warned that “trust of consumers in their
government’s ability has seriously suffered” as a resolution to the
crisis remains elusive.

“This loss of trust is now clearly also having an impact on
consumption and is increasing anxiety,” the Group warned.

— Frankfurt bureau: +49-69-720-142; email: —