Retail sales in Germany recorded a surprise improvement in May, cementing expectations that private consumption will continue to remain one of the largest contributors to economic growth backed by solid labor market conditions and income expectations.
On a seasonally and calendar adjusted basis, retail sales grew 0.8 percent month-over-month, faster than the 0.4 percent growth expected, data from the Federal Statistical Office showed Friday.
The outcome reversed the 0.1 percent drop in April and represented the first improvement following three consecutive monthly declines.
Annually, retail sales rose 0.4 percent in real terms in May, beating forecast for a 0.2 percent increase. However, the growth was weaker than the 2.7 percent increase recorded for April.
Official data released on Thursday showed a surprise fall in the number of unemployed in the country in June after extreme weather and higher number of public holidays were blamed for weak May data.
The number of unemployed persons in the country fell by 12,000 in June from a month earlier to 2.94 million, according to the latest figures released by the Labor Ministry. In May, the number of unemployed people rose by 17,000.
Market research firm GfK said Wednesday that German consumer sentiment is set to climb to its highest level in almost six years in July amid increased optimism about the general economic prospects as well as continued rise in income expectations.
The survey also found that there have been a repeated decline in Germans' propensity to save, which has now reached the lowest level on record. Saving is currently not an attractive prospect for Germans, in view of the historically low interest rates, GfK said in the report.
Bundesbank expects economic activity to pick up strongly in the second quarter. It projects a 0.3 percent expansion for this year and 1.5 percent growth in 2014. A rebound in consumer spending helped the German economy dodge recession in the first quarter, with gross domestic product growth of 0.1 percent.
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