Wednesday, 1 July 2009

2nd UPDATE: German May Retail Sales Up 0.4% From April

2nd UPDATE: German May Retail Sales Up 0.4% From April

(Adds German retail association HDE 2009 sales forecasts)


By Nina Koeppen
Of DOW JONES NEWSWIRES


FRANKFURT (Dow Jones)--German retail sales edged up for the third consecutive month in May, but only very slightly, with rising unemployment dampening the scope for further improvements.

Retail sales rose a real 0.4% in May from April, above economists' forecasts for flat turnover, data from the Federal Statistics office showed Wednesday.

German retail sales fell a real 2.9% from a year ago, as May 2009 had one working day less than the same month in 2008, the statistics office said.

The outlook for the sector, which as been struggling for several years, remains mixed at best, economists said.

Low inflation rates, promotional offers and the government's economic stimulus plans have put a floor under retail sales, economists said.

And the implementation by many German companies of short-time work schemes has helped to cushion the impact of the severe recession on the labor market.

"However, with the expected strong deterioration on the labor market in the coming quarters, the moderate positive dynamic of private spending should come under increasing pressure later this year," cautioned Alexander Koch, an economist at UniCredit in Munich.

Separately, German retail association HDE Wednesday cut its 2009 sales forecast, saying it now expects nominal retail sales to fall 2%. The group previously said they would be flat or fall 1%.

HDE also said that retail sales have so far been below expectations.

Food, drinks and tobacco sales were down a real 2.4% from May 2008, while nonfood sales fell 3.0% over that period, the statistics office said.

The data are based on figures from seven German states that account for about 76% of total sales. They don't include car sales that were boosted by the German government's scrapping incentives.

Web site: www.destatis.de

-By Nina Koeppen, Dow Jones Newswires; 49 69 29725-509; nina.koeppen@dowjones.com

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(END) Dow Jones Newswires

July 01, 2009 05:27 ET (09:27 GMT)


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