No quantum leap for German consumption, yet. This morning's data added to the latest disappointment on German private consumption. German retail sales, seasonally and inflation adjusted, dropped by 0.3% MoM, from -1.9% in November. With only one single month of growth, German retail sales have been on a downward trend since August.
With today's numbers, private consumption can hardly have been a growth driver in the fourth quarter. Nevertheless, despite recent disappointments, private consumption could become the growth surprise of 2011. Particularly wage developments could provide important tail wind. Last year, real negotiated wages only increased by 0.5% YoY. This small increase was probably driven by some fears of future job losses, short-time working schemes and the fact that many collective bargaining rounds were already finalized in 2009 or earlier. This year's collective bargaining will start soon and demands for wage increases range from 5% to 7%.
After today’s numbers it might sound like a whistling in the dark, but with increasing wages, dropping unemployment and pent-up demand, private consumption should become an important growth driver this year