* Annual fall in retail sales biggest since May 2009
* Low jobless, higher wages fail to lift consumption
* Germany eyes domestic demand boost as exports weaken
(Adds economist comment, details)
By Noah Barkin
BERLIN, Jan 31 The German labour market remains
strong but it is not translating into a significant increase in
private consumption, data showed on Thursday, raising doubts
about the strength of an rebound in Europe's largest economy.
Federal Labour Office figures showed seasonally adjusted
unemployment falling unexpectedly by 16,000 in January, breaking
a long run of increases to take the jobless rate down to 6.8
percent, not far from a post-reunification low.
That news will be welcomed by the centre-right government of
Chancellor Angela Merkel, who faces an election in September
which could be strongly influenced by the state of the economy
and its ability to avoid being sucked down by weakness in key
European trade partners.
But the positive development of the labour market was
clouded by other data showing retail sales had tumbled by their
largest amount in over three years in December and a new
forecast by the HDE retail association showing it expects sales
to fall in real terms in 2013.
"These are disappointing numbers," Christian Schulz of
Berenberg Bank said of the retail data. "Consumers are not
opening up their wallets."
The notoriously volatile retail sales figures slid by 4.7
percent compared to a year ago, the weakest annual result since
May 2009. On a monthly basis, the fall was a more modest 1.7
percent, still the biggest drop since May 2011.
Economists polled by Reuters had expected retail sales to
fall by just 0.1 percent on the month and by 1.6 percent on the
Despite low unemployment and rising wages, private
consumption remains subdued.
Gross domestic product (GDP) contracted by 0.5 percent in
the fourth quarter of 2012, according to an early estimate from
the Statistics Office, and the government is forecasting meagre
growth of 0.4 percent this year.
Exports to big trading partners in Europe are slowing as the
debt crisis enters its fourth year, and Berlin now expects
foreign trade to be a drag on GDP in 2013.
According to a breakdown of the retail data, sales fell
almost across the board in December, with food, drinks and
tobacco down 4.1 percent on an annual basis, and clothes, shoes
and textiles down 6.5 percent.
Still, some economists warned against reading too much into
the data, pointing to anecdotal evidence from retailers that the
holiday period was solid.
"The retailers did not report sensational Christmas sales,
but they were broadly satisfied. It's hard to reconcile this
with the strong decline we've seen here," said Alexander Koch of
The HDE said retail sales over in November and December had
declined by 0.7 percent compared to the previous Christmas
(Additional reporting by Rene Wagner; Writing by Noah Barkin;
editing by Patrick Graham)