German retail sales surprisingly dropped in October 2017, according to official statistics office Destatis. This is one of the rare signs of weakness in the leading European economy. Retail sales fell in October by 1.2% compared to September. The expectations in the financial markets were for growth of 0.3%. This represents the most robust contraction in retail for more than one year.
The retail sales declined 1.4% on an annual basis, taking into account inflation, following a solid increase of 4.1% a month earlier. The average market expectation was 2.8%. This is also the first drop in the indicator since eight months.
The real turnover in German retail sales in the first ten months of this year rose 2.4% over the same period in 2016, while the nominal turnover increased by 4.3%.
For several years, Germany’s economy has been driven mostly by exports. Last year, however, private consumption proved to be a key driver and continued to play an important role this year, despite the traditional savings of the Germans. The domestic consumption continues to support the healthy labor market and record employment levels in Germany, rising real wages and ultranational interest rates.
Surprisingly weak data is a fact after a study released earlier this week by the GfK Institute, which reports a stabilization of December consumer attitudes in Germany for the second consecutive month just below the 16-year high reached in September.
The GfK index, which defines future consumer attitudes for December, remains at the November level of 10.7 points. This is a sign of continued positive attitude of German consumers at the beginning of festive pre-Christmas shopping.