German retail sales fell unexpectedly on the month in October, but a solid rise on the year strengthened expectations that private consumption will remain a key growth driver for Europe's largest economy in the final quarter of the year. As Sonia Legg reports, Spain's retail sector is also looking positive ahead of an election later this month.
Security may be tighter than normal but Germany's famous Christmas markets are still pulling in the crowds. And the year looks set to end on a positive note when it comes to retail sales. There was an unexpected dip in October. But figures for the year are on course for an overall rise of at least 2 percent That said - domestic spending still isn't the key source of growth in Europe's largest economy, says CMC Markets Jasper Lawler (SOUNDBITE) (English) CMC MARKETS, MARKETS ANALYST, JASPER LAWLER, SAYING: "They have been relying on exports and again that means we are looking across to the ECB and its policy towards the euro. It actually may turn out to be the exchange rate which determines the success of Germany's economy rather than its domestic spending which continues to look a bit weak." Not so in Spain - retail sales rose at their fastest rate in a year. At 5.8 percent they also continued an upward trend that has now lasted for 15 months. That should be good news for Prime Minister Mariano Rajoy three weeks before an election - but then again.... (SOUNDBITE) (English) CMC MARKETS, MARKETS ANALYST, JASPER LAWLER, SAYING: "A large part of the electorate don't feel they are benefitting from the growth that Spain is experiencing at the moment so those votes could count against Rajoy and we could perhaps experience a more anti-austerity, maybe anti-EU type party being elected which destabilises Europe." Greece knows all about that. And it still has the capacity to rock the euro zone boat. Retail sales were down 3.2 percent in September hit by capital controls and bank shutdowns. All eyes maybe on Spain's election but Greece's economy - and the bailout process - is still making some a little nervous.