German retail sales rebounded strongly in October, growing at the fastest pace in nearly one-and-a-half years, as a strong labor market and earnings growth supports spending despite a weaker economy.
Retail sales grew 5 year-on-year following a revised 2.8 percent slump in September, preliminary data from the Federal Statistical Office showed on Friday. Economists had expected a gain of 1.4 percent.
The pace of growth was the fastest since May 2017, the agency said.
Sales of food, beverages and tobacco grew 4.9 percent, and non-food sales climbed 5.1 percent with the biggest increase of 14.5 percent seen in internet and mail orders sales.
On a month-on-month basis, retail sales dropped 0.3 percent in October, same as in September, which was revised. In contrast, economists were looking for a 0.4 percent increase.
Sales fell on a monthly basis for a fourth consecutive month.
The biggest Eurozone economy shrunk for the first time since early 2015 in the third quarter, down 0.2 percent, on weak exports and lackluster car sales.
However, the Bundesbank has brushed off the latest GDP decline as a blip and expects the economy to return to an expansionary course before the year is out.
The bank expects output and automobile exports to return to normal and private consumption to reclaim its role as the major economic driver.
German consumer confidence is set to slightly weaken in December as high inflation rates and global economic uncertainty weigh on households' sentiment, survey results from the GfK showed this week.
The GfK confirmed its forecast that real private consumer spending will increase by around 1.5 percent this year.
Unemployment hit a record low 5 percent in November despite a weaker economy, official data showed on Thursday.
Inflation slowed more-than-expected in November to 2.3 percent from a decade-high 2.5 percent in October.
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