German retail sales surprisingly fall in August, soar higher on year

Retail sales in Germany unexpectedly fell during the month of August, although soaring higher compared to a year ago period.

German retail sales declined 0.4 percent in August after adjusting for seasonal and calendar variations, data released by the German Statistics Agency Destatis showed Friday. This followed a downwardly-revised 0.5 percent gain for the previous month, which was originally reported as 1.7 percent.

However, on an annual basis, there was a 3.7 percent rise, while the annual increase for the first eight months of 2016 was 2.2 percent in real terms and 2.3 percent in nominal terms with prices broadly unchanged during the period.

There was an underlying soft tone in clothing sales, while sales in other retail stores such as department stores declined 0.3 percent over the year. This weakness will maintain some expectations that security concerns are having an impact in curbing retail activity.

Moreover, Germany's HDE retail association last week raised its forecast for nominal sales growth in 2016 to 2.5 percent, up from its previous forecast of 2.0 percent.

Moreover, the German government expects soaring private consumption, helped by record-high employment, rising real wages and nearly stable prices, to help the economy grow by 1.7 percent this year. Economic institutes predict an expansion of 1.9 percent, Reuters reported.