German unemployment fell by more than expected in July and retail sales rose in the prior month, buoying hopes that a strengthening labour market will lift consumer spending and keep Europe's largest economy on track.
The seasonally adjusted unemployment total fell by 45,000 on the month, or roughly 10,000 more than economists had predicted in a Reuters poll, the Federal Labour Office said on Tuesday.
The jobless rate dipped to 9.0 percent from 9.1 percent. Federal Statistics Office data on Tuesday showed retail sales rose 0.7 percent on the month in June, less than the expected 1.0-percent gain. Sales including vehicles and gas stations rose 0.3 percent on the month, Bundesbank data showed.
The tentative sales rise showed an expected recovery in consumer spending was starting to gain traction after households were hit earlier this year by a three percentage point increase in value added tax (VAT) on January 1. Household spending has also been held back by job insecurity, which is slowly easing as unemployment falls further from a level above 5 million in early 2005. Germany created a net 32,000 jobs in June, Statistics Office figures showed.