German retail sales in new fall

Rising unemployment will dent sales further, analysts say

German retail sales fell for the second consecutive month in September, as the economic downturn continued to affect consumer spending.

Retail sales declined 0.5% from August, and were down a by 3.9% on the year, figures released by the federal statistics office showed.

Revenue from food and tobacco was 2.3% lower on the year, while some pharmaceuticals also saw a decrease.

Germany pulled itself out of recession in the second quarter of this year.

'Good times over'

The figures are being taken as a a sign that household demand remains weak on continuing fears that unemployment will continue to climb throughout 2009.

"The good times for retail are over for now," said Ukrike Kastens at Sal Oppenheim.

"The labour market is holding up surprisingly well. Sooner or later, however, unemployment is going to rise substantially.

"People are holding onto their money, in part because they don't trust the tax cut promises of the politicians. We expect retail sales to weaken significantly over the coming months. It will become tougher."