German Retail Sales Drop in August

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German retail sales fell in August following a bumper July, official data showed Wednesday, but economists said the outlook for retailers remains good in light of a buoyant labor market and solid wage increases.

Retail sales in August dropped 0.4% on the month, adjusted for inflation and seasonal swings, but rose 2.5% from August last year, the federal statistics office said. Economists polled by The Wall Street Journal had forecast a monthly declined of 0.2%.

“The conditions in retailing are good at the moment,” said Olaf Roik, chief economist at Germany’s HDE retail association, pointing to a “favourable mix” of high employment, healthy wage increases and low inflation.

Last week, HDE raised its forecasts for retail sales growth in 2015 to 2% from 1.5% previously. The Ifo think tank said the country’s retailers in September were more upbeat about their current business situation and their trade outlook.

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