German retail sales rise at strongest rate in almost 1-1/2 years

German annual retail sales rose at their strongest rate in almost 1-1/2 years in October but monthly sales dropped for the fourth consecutive month, sending mixed signals about the state of household spending in Europe's largest economy.

Spending by German shoppers rose by 5.0 percent on the year in real terms in October, data from the Federal Statistics Office showed on Friday.

That was the highest rise since May 2017 and compared with a Reuters consensus forecast for an increase of 2.7 percent.

On the month, retail sales decreased by 0.3 percent, confounding the Reuters consensus forecast for a 0.3 percent increase.

Retail sales are a volatile indicator often subject to revision.

The data comes after a GfK survey published on Wednesday showed the mood among German shoppers deteriorated more than expected heading into December.

Household spending has become a key growth driver in recent years as Germans benefit from record-high employment, hefty pay hikes and low borrowing costs but private consumption weakened during the third quarter, holding back overall growth.