German retail sales for May better than expected

German consumers returned to the shops in May, official data showed on Friday, exceeding analysts' forecasts who had reckoned on a fourth monthly drop in retail sales in Europe's biggest economy.

Retail sales rose by 0.8 percent in May from the level in April, according to provisional adjusted figures by the federal statistics office Destatis.

Economists polled by Dow Jones Newswires had forecast an average 0.3-percent drop, on the heels of declines in the three previous months.

Although the figure for April was revised upwards, it still showed a fall of 0.1 percent.

Household consumption is a key factor of growth in an economy, although in Germany the critical driver activity is exports.

On a 12-month basis, retail sales for May increased 0.4 percent due to sales in food, drink and tobacco, while non-food sales slipped on a year-on-year basis.

The rise in retail sales comes a day after data revealed a robust labour market in Germany for June when unemployment registered a surprise fall, with 12,000 fewer people searching for work, and a poll earlier in the week showed buoyant consumer confidence.

Annalisa Piazza, of Newedge Strategy, pointed out that German retail sales data were very volatile and often substantially revised but said that German consumer spending remained "relatively upbeat" in the second quarter.

"German households benefit from the extremely resilient labour market and the limited impact of the recent slowdown on their disposable income," she said in an analyst's note.