Retail Sales in Germany Rise

Job creation, higher wages contribute to increase

Germany, already the brightest economic spot in the euro zone, shone even brighter on Monday with the news that retail sales were up, fueled by more jobs and higher wages.

Bloomberg reported that the Federal Statistics Office in Wiesbaden said sales were up 0.8% from February in March, adjusted for inflation and seasonal swings. They were up 2.3% from the same time last year.

German unemployment is at its lowest level in 20 years, and wage gains were the largest since early in the 1990s. Business confidence also rose in April to a nine-month high, and inflation was down to its lowest level in over a year, giving consumers more to spend.

“Conditions for retail sales are good,” Andreas Scheuerle, an economist at Dekabank in Frankfurt, said in the report. “People that are less concerned about unemployment are more willing to spend money. At the same time, we have higher wage growth this year, which should also boost consumer spending sooner or later.”

Germany’s Federal Labor Agency will release a report on unemployment on Wednesday that is expected to show a drop in unemployment for April. IG Metall, the largest European trade union at 3.6 million workers, is seeking a 6.5% pay increase for its members. The German luxury clothing maker Hugo Boss sees its sales rising 10% this year, and Praktiker, Germany's third-largest home improvement retailer, beat analysts' first-quarter expectations, Bloomberg reported.

The market research company GfK said in the report, “If the labor market continues to develop as positively as is currently being forecast, it can be assumed that the consumer climate will be able to develop in an overall stable manner in the coming months.”

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