By Geoffrey Smith
Investing.com -- Retail sales in Europe's largest economy posted a surprising recovery at the end of the third quarter, helping it to avoid an early slide into contraction.
German retail sales rose 0.9% on the month, well above forecasts for a drop of 0.3%, according to the Federal Statistics Office Destatis. August's figures were revised down slightly to show a drop of 1.4%, rather than the 1.3% originally reported.
The figures suggest German shoppers lightened up a little at the end of the summer, after a barrage of negative news in July and August about the interruption of gas supplies from Russia. Other factors were also at play, with the new autumn collections and back-to-school items pushing sales of clothing, shoes, and textiles up 9.9%. Gasoline sales, by contrast, fell by over 15%, their biggest monthly drop on record, as a nationwide rebate on fuel duty expired. Consumers had raced to fill their tanks by August 31, pushing sales up 6.4% in that month.
Grocery sales were up 2.6% and non-grocery sales were up 2.4%, while online sales rose 5.8%.
Consequently, retail sales were down only 0.9% from a year earlier, adjusted for inflation and calendar effects. That's considerably stronger than the 4.9% drop forecast and a surprising show of strength from an economy that has been under pressure from sky-high energy prices almost all year.
Claus Vistesen, an analyst with Pantheon Macroeconomics, said that sales remain in the downtrend they've shown since the start of the year, despite the uptick in September. He noted that that was consistent with "still-high inflation and rock-bottom sentiment."
Vistesen argued that sales are likely to continue falling in the final quarter of the year, even though the decline eased from 3.4% in the second quarter to only 1.0% in the third quarter. One factor that may generate an upside surprise, he noted, could be that natural gas prices turn out lower than feared due to mild weather and high inventory levels, leaving consumers more disposable income for other purchases.