German retail sales rose more than forecast in May, adding to signs that a recovery in Europe’s largest economy has gathered pace this quarter.

Sales adjusted for inflation and seasonal swings climbed 0.8 per cent from April, when they fell a revised 0.1 per cent, the Federal Statistics Office in Wiesbaden said today. Economists had predicted an increase of 0.4 per cent, according to the median of 23 estimates in a Bloomberg News survey.

Sales increased 0.4 per cent from a year earlier.

“There’s a lot of positive numbers coming from the German economy at the moment,” said Stefan Muetze, an economist at Helaba in Frankfurt. “Retail sales are quite volatile which is why we’ve seen some ups and downs in the past months. In general, however, there is improvement.”

German unemployment unexpectedly declined in June, while the Ifo institute’s measure of business confidence climbed for a second month and ZEW’s investor sentiment index increased, reports showed this month.

Consumer confidence in July will rise to the highest level since September 2007, GfK AG said this week.

The Bundesbank said this month that German gross domestic product should have improved "markedly" in the second quarter, while warning of a potential slowdown in coming months. The economy grew 0.1 per cent in the first quarter, amid the longest recession for the 17-nation euro area, the country's biggest trading partner.

The Frankfurt-based central bank expects growth of 0.3 per cent this year and 1.5 per cent in 2014.

Bloomberg