Sales fell by 2.3 percent in real terms, preliminary
figures from the Statistics Office showed on Friday - a second monthly drop
that clouded a longer view showing sales rose 1.1 percent in the year to date
compared with the same period in 2009.
"This is a very weak result. It dampens the
expectations that private consumption is taking off like a rocket," said
Ralph Solveen from Commerzbank. "However, one should not forget that
retail sales data often fluctuate heavily and are revised frequently."
Revisions were indeed the case for the August figures,
which were pared down to a 0.4 percent monthly fall from an initial 0.2
percent.
The data was at variance with recent upbeat indicators
that have buttressed hopes Germany's stronger than expected rebound from recession
will persist despite the uncertain impact of a fragile global outlook on its
traditionally dominant export industries.
A survey by market research group GfK on Tuesday showed
consumer morale remains at its highest level since May 2008 going into November
on expectations of a continuing recovery, bolstering hopes that improved
domestic demand will take up much of the slack if export growth runs out of
steam.
Economic sentiment in the wider euro zone also remained
buoyant this month, improving against market expectations for a flat reading,
European Commission data showed on Thursday.
Among German businesses, sentiment hit its highest level
in 3-1/2 years in October and firms' expectations also improved, a survey
showed last week, while the corporate outlook remained bright.
German sporting goods company PUMA, for example on
Tuesday hiked its sales outlook and posted bumper profits, following in the
footsteps of rivals Adidas and Nike to benefit from a global economic recovery.
Economists are watching retail sales and other consumer
data closely for evidence of a pick-up in spending, which policymakers hope
will lend increasing support to the economy this year and next and partly
compensate for easing export growth.
Consumer spending increases, combined with surging
exports, powered the German economy to growth of 2.2 percent in the April-June
quarter, and so far economists see private consumption rising by around 1
percent next year.
But that outlook could brighten given an increasingly
sturdy jobs market, which passed a milestone in October by falling below 3
million in unadjusted terms, hitting its lowest level in 18 years in a
development that seems likely to reassure consumers.
Economy Minister Rainer Bruederle has said domestic
demand would make up three quarters of growth next year, but that would require
the sustained gains in retail sales that economists now see as being in doubt.
"Today's numbers are a painful reminder that another
strong growth performance in the third quarter is on a razor's edge," said
Carsten Brzeski from ING Financial Markets.
Adding to the mixed picture, another report released by
the statistics office on Friday showed Germans were kept their purse strings
closed slightly tighter in the first half of this year.
Germans saved 11.5 percent of their income in the first
six months of 2010, in seasonally adjusted terms, compared to 11.2 percent in
the same period a year earlier -- a sign less income was available for
spending.
Some positives did emerge from the retail sales data.
On an annual basis, sales were up 0.4 percent in real
terms. In nominal terms, sales fell 2.4 percent on the month but were up 1.6
percent on the year, yielding a 2.1 percent increase in the year through
September.
The data were based on sales in seven states accounting
for some 76 percent of total retail turnover.
