· The original weakness in German ex-auto retail sales in February had already been revised up, leaving February in a small decline. Now March sales are flat. The strength in the quarter stems from the surge back in January. Real retail sales are up at a 4.9% annual rate in the quarter. Nominal sales are up by an eye popping 8.1%. But all of the quarter’s gains stem from a surge in sales in January – a surge that still seems in the process of being unwound. While recent German surveys of consumer sentiment have been upbeat, surveys of retailers have not. It appears that real retail sales ex-autos are in a position to boost Q1 GDP but it does not seem that this is any sort of a watershed event.

German Real and Nominal Retail Sales

Nominal

Mar-08

Feb-08

Jan-08

3-MO

6-MO

12-MO

YrAgo

QTR Saar

Retail excl Auto

0.0%

-0.2%

2.3%

8.8%

2.1%

1.5%

-0.1%

8.1%

Food Beverage & Tobacco

1.1%

-0.8%

3.1%

14.3%

0.4%

0.5%

0.8%

2.9%

Clothing footwear

-8.7%

4.5%

1.7%

-11.6%

-20.6%

-5.1%

5.8%

7.8%

Real

Retail excl Auto

-0.1%

-0.7%

1.9%

4.5%

-1.2%

-1.2%

-0.7%

4.9%