The euro dipped by over 30 pips after data shows German retail sales fell in August by 2.9 percent on a month-over-month basis in real terms, much worse than market forecast of only a 0.5 percent drop. In nominal terms there was a 3.0 percent month on month drop. The German Statistics office says the decline is the strongest decrease since May 2007.
The decline in Germany’s retail sales last month was the most in four years German retail sales declined the most in more than four years. It is evident from the data that consumer’s willingness to spend was dampened by the ongoing euro zone debt crisis. Mounting fears of a double dip recession and the risk of Greek default kept German households away from stores.
The European Commission on Sept. 15 cut its euro-region growth forecasts for the second half and warned the economy, Germany’s biggest export market, may come “close to standstill at year-end.” The International Monetary fund in Washington on September 20 also lowered its growth projections for the euro region and Germany for this year and next.