Berlin - The grim news continues to roll in about the German economy with data released Thursday showing January retail sales posting a surprise fall and key car exports plunging at the end of 2008.

Adjusted for inflation and seasonal swings, German retail sales fell by 0.6 per cent month-on-month in January, the German statistics office said.

This represented a year-on-year drop of 1.3 per cent with concerns about rising unemployment in Europe's biggest economy helping to offset the possible boost to consumer spending resulting from dwindling inflation.

Analysts had expected a modest 0.2 per cent month-on-month rise in retail sales in January. However, the statistics office revised upward the December increase to 0.5 per cent.

Going forward, economists expect a series of government measures and tax benefits could help to spur consumer spending.

The federal vehicle registration office said this week new auto registrations surged by 21.5 per cent per cent year on year in February following a new government scheme aimed at encouraging Germans to trade in their old cars for new more environmentally sound models.

The increase represented a 46.7 per cent jump in registrations compared with January.

But as a measure of the crisis that has taken hold in the global car industry, statistics office data also released Thursday showed German auto exports tumbling by 20 per cent during the fourth quarter last year compared to the same period in 2007.

German car exports, which are one of the nation's top exports, were down 5.4 per cent in the full-year 2008 compared to 2007. (dpa)