Although the Q2 GDP number is already in release, Q2 German nominal ex-auto retail sales now show a 4.6% gain (saar) over the previous quarter. Real retail sales on this same basis are up by 3.4% saar and while that sounds strong, it comes after a Q1 annual rate drop of 9%.

The plot of ex-auto German real retail sales shows that they just have not been the same since January when the VAT kicked in. Obviously the VAT would hammer the Yr/Yr sales pace lower. But the six-month and the three-month growth rates have shown no life in recent months. The three-month growth which takes calculations in June compared to the post VAT month of March still shows a negative growth rate of -1.1%. With GDP in Q2 across the Euro area coming up as a disappointment, expectations of a strong consumer turnaround have turned to a question mark. Now, with financial sector turmoil swirling about it is less certain if the consumer will throw his lot in with the growth crowd. At least the Euro has backed off, that is one silver ling in the midst of these other difficult events, at least for the growth outlook.