Germany’s Retail Sales Falter

German retail sales declined 1.6 percent in September, one of the worst declines this year.  Merchants’ sales in Germany, the largest market in the Euro-Zone, have declined for six of the past nine months during 2005.  Year-to-date, German retail sales are down 0.7 percent on a month-to-month basis. 

For jewelers, the continued weakness of retail sales does not bode well for the upcoming holiday selling season. 

The clothing and footwear sector reported a massive 9.1 percent contraction during September.  This indicates a dramatic decline in consumer spending after the close of the summer selling season.

Retail sales activity in Germany, one of the most influential economies in the Euro-Zone, remains disappointing.  Consumers are reticent to open their wallets despite a pickup in consumer sentiment. 

Looking ahead, stubbornly high levels of unemployment and modest wage increases will dampen consumer spending for the foreseeable future.  In addition, German consumers are feeling the pain of substantially higher energy costs, with rising home heating and fuel prices eating into disposable income. 

In short, Christmas stockings in Germany will likely be filled with coal as a result of continued weak consumer demand.