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| Europe | |
| German retail sales fall again | |
| 2005-11-01 | |
A fourth consecutive monthly fall in German retail sales yesterday highlighted the weakness of consumer spending in Europe's largest economy and creates a significant challenge for the incoming government. Retail sales unexpectedly fell 1 per cent in September, according to seasonally adjusted figures released by the Bundesbank, leaving high-street turnover at the lowest level since May last year and scarcely changed since the start of the decade. The data illustrated the split character of Germany's economy: business confidence last week reached a five-year high, helped by the strength of exports. Economists warned that Germany's high-street plight could worsen if the new grand coalition government of Angela Merkel went ahead with a threatened rise in value added tax. "Really, that would be a terrible thing to do," said Dirk Schumacher, economist at Goldman Sachs in Frankfurt. But Germany appears set to be subjected to a "fiscal squeeze", with the new coalition contemplating the ending of tax breaks and spending cuts to bring the public sector deficit back in line with European Union rules. Including car sales, German retail sales in the third quarter were down 0.9 per cent compared with the previous three months. The weak figures contrast sharply with the more upbeat mood in France, where household spending in the third quarter jumped 2.4 per cent. Among other large eurozone countries, Spain has seen strong consumer spending this year but the picture has been weaker in Italy and the Netherlands. In Germany, retail sales have reflected the downward pressure on labour costs exerted by companies as they have fought successfully to rebuild international competitiveness. In recent months, higher energy costs and September's indecisive election result have further reduced Germans' willingness to spend in shops. "Depressed by high oil prices and mounting political uncertainty, German consumers apparently went on a buyers strike at the end of the summer," said Holger Schmieding, economist at Bank of America. The variations in consumer spending within the eurozone have increased the difficulties faced by the European Central Bank as it ponders a possible interest rate rise. Recent eurozone confidence indicators have reinforced the view that economic activity has strengthened in the second half. But the ECB would find it hard to ignore data showing a weakening in retail sales in the bloc's largest economy. | |
| Posted by:lotp |
| #3 Retail/consumer sales may decrease with an aging population, but expenditures on medical products and services rise. All the money will find a home somewhere; the goal is to get it relocated rapidly and frequently. |
| Posted by: Glenmore 2005-11-01 13:55 |
| #2 When your population flatlines and begins to contract you can expect declining retail sales. |
| Posted by: DoDo 2005-11-01 11:30 |
| #1 This will work out good for Gerd. He can blame the eventual chaos on Merkel (and the Amis), and then get back in power. |
| Posted by: Spot 2005-11-01 08:31 |