The German retail sector in 2024 showcased resilience amid economic challenges, recording 1.1 percent real growth and 2.5 percent nominal growth (calendar and seasonally adjusted) compared to 2023, according to provisional estimates. The year's second half outperformed the first, with 3.0 percent growth, reversing an earlier 0.4 percent decline, highlighting recovery momentum.

November data encapsulated mixed trends. While sales dipped 0.6 percent month-over-month, they climbed 2.5 percent year-over-year, fuelled by early Christmas shopping driven by"Black Friday" and"Cyber Monday" promotions. Non-food sales surged 2.3 percent year-over-year, with online and mail-order retail leading the charge, boasting a 9.7 percent increase compared to November 2023.

Food retail also gained traction, with November's sales rising 1.7 percent in real terms year-over-year, underpinned by robust growth towards the year-end. However, compared to the 2021 record highs of the series (began in 1994), real sales in 2024 remained 2.7 percent lower, reflecting ongoing inflationary pressures.

Despite hurdles, the retail sector's 2.6 percent growth above 2019 pre-pandemic levels demonstrates adaptability, particularly in e-commerce. This performance reinforces the sector's capacity to navigate evolving consumer behaviour and macroeconomic shifts.

The latest update takes the German RPI to 24 and the RPI-P to 9, meaning that economic activities are ahead of market expectations.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data are compiled from about 27,000 retail businesses and are reported in both nominal and volume terms. Autos are excluded. A very limited breakdown of subsector performance is available in the initial report which is itself subject to sometimes sizeable revision but much greater detail is provided in the following month's release.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report. However, by excluding the services sector, changes in retail sales data can differ significantly from those in total household spending.