BERLIN (Reuters) – German retail sales fell unexpectedly on the month in July, data showed on Wednesday, dashing hopes that household spending in Europe’s largest economy will be powerful enough to drive a strong recovery in the third quarter from the coronavirus shock.
Retail sales were down by 0.9% on the month in real terms after a revised drop of 1.9% in June, calendar-adjusted data from the Federal Statistics Office showed.
This missed a Reuters forecast for a 0.5% increase.
The picture was a bit brighter, however, when looking at the development over the past 12 months.
On the year, retail sales rose by 4.2% in real terms after an upwardly revised increase of 6.7% the previous month, the data showed.
Compared with February, the month before the outbreak of the pandemic, retail sales were 0.9% higher in July, the office said, suggesting that this sector of the economy managed to recover relatively quickly in a V-shaped development.
Retail sales are a volatile indicator often subject to revision.
The German economy contracted by a record 9.7% in the second quarter as household spending, company investment and trade all collapsed at the height of the COVID-19 pandemic.
The government has since March unleashed an array of unprecedented rescue and stimulus measures, financed with record new borrowing of 217.8 billion euros, to help companies and consumers recover from the crisis.
The stimulus package includes a temporary cut in value-added tax from July 1 until December 31 to give domestic demand an additional push in the second half of the year.
(Reporting by Michael Nienaber; Editing by Andrew Heavens; Editing by Paul Carrel and Andrew Heavens)
