Retail sales in Germany, Europe’s largest economy, unexpectedly fell in March as rising unemployment prompted consumers to trim spending.
Sales, adjusted for inflation and seasonal swings, declined 1 percent from February, the Federal Statistics Office in Wiesbaden said yesterday.
Economists forecast a gain of 0.2 percent, the median of 17 estimates in a Bloomberg News survey showed. From a year earlier, sales dropped 1.5 percent.
German companies are scaling back production and cutting jobs, discouraging consumers and exacerbating the country’s worst recession since World War II. German unemployment rose for a sixth month last month and the government said last month the economy may contract 6 percent this year.
“The economy will probably continue to shrink far into the second half of 2009,” said Eckart Tuchtfeld, an economist at Commerzbank AG in Frankfurt.
“That’s not an environment for new jobs. Unemployment and employment are lagging economic indicators and will worsen at least until year end,” he said.
German retail sales declined for an 11th straight month last month, the Bloomberg purchasing managers’ index showed on Wednesday.
Companies remained pessimistic about meeting their forecasts in the month ahead because of “weak underlying economic conditions,” the survey of 500 executives showed.
Unemployment began to rise in November after declining for the previous three years. Some 50,000 jobs per month, or 1,600 a day, will be lost on average this year, the government estimates. Last month, the adjusted jobless rate rose to 8.3 percent from 8.1 percent.
Fielmann AG, Europe’s largest chain of optical stores based in Hamburg, on Thursday reported a 13 percent drop in first-quarter profit. Henkel KGaA, the German maker of Persil detergent, said last month that it’s likely to face “enormous difficulties” this year.
Bundesbank President Axel Weber said last month that the German economy may have contracted at least 3 percent in the first quarter after shrinking 2.1 percent in the previous three months.
A “slight revival of the German economy is only to be expected next year at the earliest,” he said on Wednesday.
The European Central Bank has already signaled it’s ready to lower its benchmark interest rate further from a record low of 1.25 percent to bolster the economy. The bank’s 22-member Governing Council will hold its next meeting on Thursday.
March this year counted 26 sales days, two more than a year earlier, the statistics office said yesterday. Results were calculated using data from German states accounting for about 76 percent of retail sales. In the first quarter, retail sales dropped an adjusted 3.2 percent from a year ago.
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