Hopes that German household spending could power a strong economic recovery were hurt by new data on Wednesday (September 2).

Retail sales fell unexpectedly in July - down almost 1% on the month and missing a Reuters forecast for a 0.5% gain.

Over the longer term there were some positive signs for analysts to chew on though.

On the year, retail figures rose by 4.2% in real terms.

And compared with February, a month before the global health crisis kicked-in, sales in July were higher in real terms.

That may suggest a relatively quick recovery.

The headline figure masks big differences between sectors though.

Online retailers saw their sales rise by a fifth between January and July.

But sales in shops selling textiles, clothes and shoes collapsed by more than a quarter.

Overall, the German economy contracted a record 9.7% in the second quarter, as household spending, company investment and trade all collapsed.

Since March, the government has voted through massive stimulus measures - financed by record new borrowing of 217.8 billion euros, or about 259 billion dollars.

There are signs it has helped.

On Tuesday, the government revised its 2020 forecast for the economy to shrink by 5.8% this year, down from a previous estimate of 6.3%.

It does, though, still represent Germany's biggest economic slump since World War Two.