Germany Waiting On The ECB

According to provisional results from the Federal Statistical Office (Destatis), the June turnover of German retail sales, when adjusted for calendar and seasonal variations, was in nominal terms 0.3 percent larger than that of last May. However, in real terms, it was 0.1 percent smaller than that in the prior month.

It seems as if the brunt of the Euro Zone bailout is taking its toll on the European powerhouse. Also up for release today was the German Unemployment Change report. 7,000 people were added to the list of the jobless and seeking for work in the past month, matching the figure that was added last May.

Just last week, Moody's Investors Service changed its outlook for top-rated Germany, as well as the Netherlands and Luxembourg, from stable to negative. The likelihood of increased support for indebted Euro Zone states such as Spain and Italy, not to mention the probability of Greece faltering in its bailout commitments, was taken into consideration by the ratings agency for the change in outlook.

This was not even enough, as Moody’s likewise changed the changed the outlook on the provisional (P)Aaa long-term rating of the European Financial Stability Facility to negative from stable. This serves as a blow to a fund that was supposed to backstop struggling members of the single currency union.

Moody’s said the move followed on from its decision the day prior to change the outlooks for Germany, the Netherlands and Luxembourg to negative. All three are guarantors for the EFSF, with Germany holding the largest share at just over 29 percent.

There is small wonder therefore, that the mood in Germany is weakening.

The optimism for fresh measures from the European Central Bank, after President Mario Draghi said the bank was ready to do whatever was necessary to save the Euro, is hoped to alleviate the stress on the German taxpayers. Bets are on for Thursday’s announcement.