German retail sales dropped again in March, consumer spending remains weak

German retail sales surprised on the downside again in March. Consumer spending continues to disappoint. Hight street activity in the Germany dropped for the fourth straight month, falling 0.6 percent on a sequential basis. Over the initial three months of the year, retail sales fell nearly 1 percent on a three-month on- three-month basis.

A similarly subdued quarter on the German high street was last seen six years ago. In all, this implies that the private consumption weakness seen over the earlier two quarters in Germany – it fell 0.2 percent quarter-on-quarter in the third quarter and unchanged in the fourth quarter – continued in the first quarter, notwithstanding the fact that consumer confidence continued to be strong, noted Daiwa Capital Markets Research in a report.

And while equivalent private consumption data for the euro area as whole have been slightly stronger, they too decelerated significantly in the second half of last year to just 0.2 percent sequentially in the fourth quarter, and any rebound in the first quarter appears unlikely, stated Daiwa Capital Market Research.

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