German retail sales grew at the fastest pace in seven years in January, staging a strong recovery from the slump in the final month of 2013.
Retail sales were up a calendar and seasonally adjusted 2.5 percent, representing the biggest increase since February 2007, data from Destatis showed Friday. Economists expected a 1 percent increase for January compared to the 2.1 percent drop in December, which was upwardly revised from the 2.5 percent decline estimated initially.
Year-on-year, sales rose 0.9 percent in January, after a 1.5 percent slump in the previous month. Economists had forecast a 1.7 percent decline.
Falling unemployment, rising consumer confidence and low inflation has supported the rebound in consumer spending. The recovery in spending also suggests that activity is gaining momentum in the biggest Eurozone economy.
Data released by the Federal Labor Agency yesterday showed that unemployment eased further in February and hit the lowest level in nearly one-and half years.
This week, the European Commission has forecast German jobless rate to ease to 5.2 percent in 2014 from 5.3 percent in 2013. The figure expected to drop further to 5.1 percent next year.
Lower unemployment and better income expectations have boosted consumer confidence, which is set to hit a seven-year high in March, according to the market research group GfK. The firm has predicted 1.5 percent growth in total private consumption during 2014.
Inflation unexpectedly eased to 1.2 percent in February, slowing for a second straight month, preliminary data from Destatis showed yesterday.
The German economy expanded 0.4 percent in the December quarter, slightly faster than the 0.3 percent expansion seen in the third quarter. The government projects 1.8 percent growth for 2014.
The European Commission also raised its 2014 growth forecast for Germany to 1.8 percent from 1.7 percent and its projection for 2015 was lifted to 2 percent from 1.9 percent.
Highlighting the hugely divergent trends in two of the leading Eurozone economies, French consumer spending fell much more-than-expected in January, according to figures released by INSEE today.
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