August 31, 2017 / 6:20 AM / a year ago

Weak German retail sales cast some doubt on consumers' strength

BERLIN (Reuters) - German retail sales fell more than expected on the month in July and posted a less pronounced increase on the year than forecast, data showed on Thursday, suggesting that household spending lost some momentum an the beginning of the third quarter.

FILE PHOTO - A woman walks past a store window advertising up to 50 percent discounts in Berlin, January 9, 2014. REUTERS/Fabrizio Bensch

The volatile indicator, which is often subject to revision, showed retail sales fell by 1.2 percent on the month in real terms, the Federal Statistics Office said.

That compared with the Reuters consensus forecast for a 0.4 percent fall and followed an upwardly revised increase of 1.3 percent in June.

On the year, retail sales jumped by 2.7 percent in July. That undershot a Reuters consensus forecast for an increase of 3.5 percent.

Private consumption has overtaken exports as the main driver of growth as Germans revel in record-high employment, increased job security, rising real wages and ultra-low borrowing costs.

A survey last week showed already buoyant consumer sentiment continued to rise further heading into September, suggesting that the consumption-led upswing will continue and boding well for centre-right Chancellor Angela Merkel less than a month before a federal election in which she seeks a fourth term.

Reporting by Michael Nienaber; Editing by Caroline Copley

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