German Retail Sales Rise Most In 3-1/2 Years

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German retail sales grew at the fastest pace in more than three years in October, as consumer confidence strengthens amid favorable labor market conditions and low inflation.

Retail sales rose a calendar-and-seasonally adjusted 1.9 percent month-over-month, preliminary figures from Destatis showed Friday. Economists had expected 1.5 percent growth. The increase was the biggest since June 2011, when sales grew 2.6 percent.

Sales rebounded from a 2.8 percent slump in the previous month, which was revised from 3.2 percent. It was the worst fall since January 2009.

On a year-over-year basis, retail sales increased 1.7 percent in October after rising 2.4 percent in the previous month, revised from 2.3 percent. This was in line with economists' expectations. Sales grew for a second straight month.

Food, beverages and tobacco sales increased 1.9 percent annually, while non-food sales were up 1.5 percent. Internet and mail order sales grew 5.6 percent.

The sales data adds to the recent string of figures suggesting accelerating growth momentum in the biggest Eurozone economy. The German economy narrowly avoided recession in the third quarter, expanding a modest 0.1 percent from the previous three months.

Unemployment reached the lowest in more than two decades in November and the country's EU measure of inflation slowed to its lowest level in five years in November, official data showed yesterday.

Elsewhere, the monthly survey by the GfK showed yesterday that German consumer confidence is set to strengthen further in December, as income expectations and willingness to buy improved for a second straight month from higher levels.

That said, the market research group warned that the spread of Ebola to Europe would represent a considerable risk for positive economic development in Germany in future.

The closely-watched Ifo business confidence index rose for the first time in seven months in November.

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