German retail sales dropped by 1.5% in August from the level in July, confounding expectations for a slight rise as an unemployment cloud hangs over households, official data showed today.
The sudden fall suggested that German consumers might not contribute markedly in the short term to a rebound from the country's worst recession for six decades.
A government subsidy to scrap older cars has boosted car sales this year but that has now run out and experts were waiting to see how consumption in general would hold up.
Analysts had expected retail sales to increase by 0.1%, following a rise of 0.7% in July. Consumption has been tipped as a source of growth in Germany, which managed to pull out of recession in the second quarter of this year.
But economists also warn that unemployment could soon begin to rise, which could incite many households to tighten their belts.
The Destatis statistics office bases its retail sales estimation on six German states which represent around 76% of all such sales in the country.
On a 12-month basis, sales were 2.6% lower, Destatis said, and they fell by 2% in the eight months from January to August from the same time a year earlier.
