German retail sales inch up
BERLIN, Germany (Reuters) -- German retail sales increased slightly in October over the month but were still well down on a year ago and a leading retail association said it was gloomy about prospects for Christmas and next year.
And in a further reminder that a recovery in the 12-nation euro zone remains fragile, a survey showed that French consumers unexpectedly became more pessimistic in November.
German retail sales advanced 0.4 percent in real terms from September, more than the 0.3 percent gain economists had expected but at a slower pace than September's revised 0.7 increase, the Federal Statistics Office said in a preliminary report on Tuesday. From October 2002, sales dropped 2.0 percent.
"Retail sales are still not doing well in Germany,'' said Rainer Sartoris, an economist at HSBC Trinkaus & Burkhardt.
"The reticence of consumers reflects the fragile state of the economy and the state of the jobs market... If people don't feel as secure in their jobs as they once did, they are apt to spend less and wait and see how things develop.''
Europe's biggest economy, which has had stagnated for a year, relied on foreign demand to help it back to growth in the third quarter, as domestic demand fell the most in a decade. Some analysts expect unemployment to increase by 100,000 and hit 4.5 million next year.
Despite the downbeat consumer confidence survey, French Budget Minister Alain Lambert sounded an optimistic note on Tuesday, saying he was confident France would see evidence of an economic rebound next year, fuelled by robust consumer spending and a recovering business climate.
MUTED CHRISTMAS
However, Germany's BAG retail association said on Tuesday it expected little improvement in Christmas retail sales and hoped the industry would avoid a further fall in turnover in 2004.
"Retailers are making a huge effort in the last few weeks of the year to turn around the lack of success in their business they have had up to now,'' said BAG President Walter Deuss.
This followed a statement by the HDE retailers' association on Monday that increased sales at the weekend failed to provide an early Christmas boost to the sector.
Hubertus Pellengahr, an HDE spokesman, said he did not expect an increase in Christmas sales from 2002, adding that spending is likely to be dampened by uncertainty over whether the government can push 15.6 billion euros in early tax cuts through the opposition-controlled upper house of parliament.
Thomas Diehl, a spokesman for KarstadtQuelle (KARG.DE), Europe's biggest department store operator, said: "We assume that because of the political wrangling over the tax reforms the cuts will have no psychological effect on consumers until 2004.''
Diehl said he expected Karstadt's Christmas sales to be around the same as last year. The company last week ditched its 2003 profit goal and warned of a "muted'' Christmas season.
Market research firm GfK said last week its monthly survey found German consumers were more upbeat about the economic outlook than at any stage since October 2002, but cautioned the outcome of the tax-reform debate still threatened a sustained recovery of private consumption.
September retail sales were revised up to a monthly gain of 0.7 percent from an originally reported reading of unchanged, the statistics office said. The data were based on figures from six German states accounting for 75 percent of total sales.
September's numbers compared with a year earlier were revised up to a gain of 0.1 percent from a drop of 0.4 percent.
A separate report from the Bundesbank showed retail sales including autos and petrol stations advanced 0.8 percent from September and declined by 1.5 percent from October 2002.
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