German Retail Sales Unexpectedly Drop on Rising Unemployment
German March retail sales dropped 1.0% m/m, much weaker than our median of -0.4% m/m. February was revised up to 0.0% m/m from -0.2% m/m reported initially, but still leaves sales down 1.2% in Q1. Sales were down 1.5% y/y in March, after 6.2% y/y in February. The sharp decline in sales over the quarter highlights the extent to which consumption has been hit by rising unemployment and the deterioration in confidence, even though the government's scrap page incentive has boosted car sales in recent month. Data backs expectations for a sharply negative GDP number in the first quarter of the year.