Jan Result: +4.8% y/y (real)
MNI Survey Median: +3.0% y/y (real)
MNI Survey Range: -3.0% to +4.5% y/y (real)
Dec Result -2.5% y/y (real) (revised from -2.9%)
---- FRANKFURT (MktNews) - German retail sales (excluding auto dealerships, petrol stations and wholesale warehouses) increased 4.8% y/y in January in real terms, a better result than projected any analyst in a Market News survey.
Despite the fact that January 2001 had one more shopping day than a year earlier, the result is a very positive sign. It suggests that the income tax cuts that took effect January 1 helped boost consumer spending and that consumer sentiment was not weakened to any great extent by the bad economic news which arrived in January.
Still, the full psychological impact of the tax cuts will only be felt in February, since most workers will see a rise in their disposal income only with the pay-checks that they receive at the end of January.
Still, it is unclear to what extend the January sales rise represents an ongoing change in consumers' behaviour to postpone some purchases until post-Christmas sales.
Compared to December, January retail sales were up a nominal 1.6% and an inflation-adjusted 2.5%, on a seasonally and calendar adjusted basis, the Statistics office said.
The January y/y result was the best since August 2000, while the m/m gain was the best since April 2000.
January retail sales were up y/y in all major retail outlet segments.
Still, the Statistics Office data must be interpreted cautiously, since it does not include sales at auto dealerships, petrol stations and wholesale warehouses (Metro). Data on total retail sales, to be released by the Bundesbank later in the day, will give a more detailed picture of the retail picture.
The German government is counting on stronger consumer spending this year -- based on the tax cuts, continued employment growth and lower energy costs -- to buoy private consumption and so offset the expected slowing of net exports. So far, this projection seems to be borne out. But recent disappointing economic data, continued high energy prices, and a growing number of downward growth revisions could damage consumer confidence in coming months and change this picture.