German May retail sales unexpectedly rose 0.4% m/m, much better than our median of -0.3% m/m and the third consecutive months of improvement. Sales rose 0.2% in the three months to April, the first time since November last year that the trend measure is in positive territory. Sales were still down 2.9% y/y, after -0.3% y/y in April. The renewed improvement over the month together with positive car sales data suggests that consumption stabilized in the second quarter of the year, which supports our view that quarterly growth bottomed in Q1. Looking ahead though, rising unemployment will keep a lid on consumption into next year.
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