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Unexpected Retail Sales Drop Poses Downside Risks To Q1 Growth

GERMAN DATA
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German retail sales unexpectedly contracted in February, by 1.9% M/M (real, seasonally- and calendar-adjusted, vs +0.4% cons; -0.3% prior, revised from -0.4%). Excluding car sales, the print was also weak at -1.9% M/M (vs -0.3% prior), the weakest monthly rate since October 2022. Ex-car sales were down 2.8% from a year earlier.

  • Overall, the data continue to suggest that German retail conditions remain very weak - excluding one broadly flat print last October, the yearly ex-auto rate has been negative for 22 months.
  • The print suggests some downside risk to consumer spending in Q124 - which, according to MNI's collation of sellside consensus, is currently projected at +0.2% Y/Y (incorporating an upward revision of 0.15pp in the past month).
  • Consumer spending contributed 0.2pp to real GDP growth in Q4'23, somewhat counterintuitively given weak prior retail sales data.
  • From an even broader perspective, real retail sales are at the same level as they were in late-2018 - food sales are the same as a decade ago.

MNI, Destatis

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German retail sales unexpectedly contracted in February, by 1.9% M/M (real, seasonally- and calendar-adjusted, vs +0.4% cons; -0.3% prior, revised from -0.4%). Excluding car sales, the print was also weak at -1.9% M/M (vs -0.3% prior), the weakest monthly rate since October 2022. Ex-car sales were down 2.8% from a year earlier.

  • Overall, the data continue to suggest that German retail conditions remain very weak - excluding one broadly flat print last October, the yearly ex-auto rate has been negative for 22 months.
  • The print suggests some downside risk to consumer spending in Q124 - which, according to MNI's collation of sellside consensus, is currently projected at +0.2% Y/Y (incorporating an upward revision of 0.15pp in the past month).
  • Consumer spending contributed 0.2pp to real GDP growth in Q4'23, somewhat counterintuitively given weak prior retail sales data.
  • From an even broader perspective, real retail sales are at the same level as they were in late-2018 - food sales are the same as a decade ago.

MNI, Destatis