German retail sales rise more than expected in February

German retail sales rose by 0.9 percent on the month in February, lifted by more than expected in fresh positive news for Europe's largest economy after it narrowly avoided a recession last year.

A Reuters poll had pointed to a month-on-month fall of 0.9 percent. Sales rose by 4.7 percent on the year, marked by strong growth of 9.2 percent in online and mail order purchases, Germany's Federal Statistics Office said in a statement.

Household spending has become a key growth driver in recent years as Germans benefit from record-high employment and low borrowing costs but retail sales are a volatile indicator often subject to revision.

In another positive sign from the economy, business morale improved unexpectedly in March after six consecutive drops, a survey showed on Monday.

But a GfK survey earlier this week dampened spirits by showing consumer morale deteriorated unexpectedly heading into April, with propensity to buy dropping to its lowest level in more than two years.

Domestic demand is expected to be the sole driver of growth this year in Germany, traditionally an export-driven economy, as exporters face a global slowdown, trade disputes and uncertainty related to Britain’s expected departure from the European Union.

The economy narrowly avoided a recession last year and the Ifo institute earlier this month slashed its 2019 growth forecast for the German economy to 0.6 percent from 1.1 percent due to weaker foreign demand for industrial goods and increased headwinds for exporters.

The Economy Ministry has said the economy had a subdued start to 2019 and probably grew only moderately in the first quarter.