2019.08.3005:32:00UTC+00German Retail Sales Log Biggest Decline Thus Far This Year

Germany's retail sales declined at the fastest pace seen so far this year in July signaling weak household spending at the start of the third quarter as the labor market started to loose resilience amid the economic downturn.

Retail turnover decreased a faster-than-expected 2.2 percent month-on-month, reversing a 3 percent rise in June, figures from Destatis revealed Friday. Sales were forecast to drop 1.4 percent.

However, on a yearly basis, retail sales rebounded 4.4 percent after falling 1.6 percent in June. This was the fastest increase in three months.

Food, beverages and tobacco sales advanced 4 percent and non-food sales increased 4.6 percent from last year.

In the first seven months of this year, retail turnover increased 2.8 percent in real terms and 3.5 percent in nominal terms.

The biggest euro area economy is on the verge of a recession as it contracted 0.1 percent in the second quarter due to weak foreign demand, and there are signs that the shrinking continued into the third quarter, strengthening calls for stimulus.

The closely-watched ifo business confidence index fell to its lowest level in nearly seven years in August as sentiment in manufacturing was hurt by escalating trade tensions across the world.

Data released on Thursday showed that unemployment rose for a second straight month in August and underemployment continued to rise, suggesting that the resilience of the labor market against the economic slowdown is gradually weakening.