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German December Retail Sales Decline Unexpectedly

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German retail sales declined unexpectedly during the Christmas season casting doubt about the contribution of private consumption to overall economic growth at the end of 2013.

Retail turnover fell 2.5 percent in real terms in December from a month ago, reversing November's 0.9 percent rise, provisional results from Destatis showed Friday. Sales were expected to increase by 0.2 percent.

Similarly, retail sales slipped 2.4 percent year-on-year in December, offsetting the 1.1 percent growth posted in November and confounding expectations for a 1.9 percent rise. December's decline was the first fall since June 2013.

Food, beverages and tobacco sales decreased 2.2 percent and non-food sales dropped 2.7 percent annually, Destatis said.

Turnover in retail trade in the whole year 2013 was 0.1 percent larger than in the prior year, the same rate as seen in 2012.

Official retail sales figures are in contrast to the findings of recent surveys. According to GfK, consumers' willingness-to-buy surpassed its seven-year high due to the improvement in income expectations and a slump in propensity to save in January.

The market research group GfK this week said consumption would again be making a major contribution to overall economic growth in 2014. Consumer confidence set to improve further in February, the survey said.

The German economy is estimated to have grown by 0.25 percent in the fourth quarter, and by 0.4 percent in the whole of 2013. Bundesbank forecasts growth to rise to 1.7 percent in 2014 and to 2 percent in 2015.

Figures from the Federal Labor Agency showed yesterday that unemployment eased sharply by 28,000 in January to the lowest level in nearly a year. The positive developments in the labor market encourage households to spend more.

The Purchasing Managers' survey showed that Germany's private sector expanded at the fastest pace in over two-and-a-half years in January.

Elsewhere today, the German Retail Federation (HDE) forecast 1.5 percent growth in sales for this year. The industry body expects food sales and online sales to be the drivers in 2014.

In 2013, retail sales grew 1.1 percent from the previous year, HDE said.

Online sales surged 54.5 percent year-on-year during the Christmas season in 2013, e-commerce and distance selling trade association BVH said. Sales reached EUR 8.5 billion.

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