By Emese Bartha 

FRANKFURT---German and French retail sales fell sharply in September, adding to concerns that business activity in the eurozone's two biggest economies struggled to gain traction at the end of the third quarter.

Although retail sales don't give the full picture of consumption because they exclude services, at best the figures point to anemic economic growth in the eurozone for the third quarter after the bloc largely stagnated in the spring.

German retail sales in September suffered their biggest monthly slump since May 2007, falling 3.2% in inflation-adjusted terms, compared with August, the Federal Statistics Office said Friday.

That was a significantly bigger drop than the 0.8% decline economists had forecast in a Wall Street Journal survey. Also, retail sales growth for August was reduced to 1.5% from a first estimate of 2.5%. Retail sales are prone to large revisions.

On an annual basis, retail sales were up 2.3%, the statistics office said. In the first nine months of the year retail sales increased 1.3% in real terms compared with a year earlier. The annual figures showed a 4.2% rise in food, beverages and tobacco sales. Elsewhere, however, sales in textiles, clothing, shoes and leather goods plunged 7.3%, Destatis said.

"Clothes sales were the key culprit," said Christian Schulz, senior economist at Berenberg, adding that the weakness "was probably caused by mild weather in the beginning of autumn, which discouraged households from splashing out on autumn and winter collections."

With these figures, the third-quarter average level of retail sales was down 0.4% versus the previous quarter, said Barclays' economist Thomas Harjes in a research note. He added that lower retail figures add "considerable downside risk" to Barclays' current forecast for 0.3% quarterly German growth in the third and fourth quarters.

In France, consumer spending fell a sharper-than-expected 0.8% in September from August, marking a weak end to the third quarter, French statistics agency Insee said Friday. As in Germany, French households spent less on clothing and leather goods, which showed the sharpest drop in spending since May 2012.

Economists polled by The Wall Street Journal had forecast a 0.1% decline on the month. On the year, consumer spending in September was up 0.2%.

"Looking forward, we enter (the fourth quarter) without any momentum; the collapse of petroleum products prices will allow some purchasing power gains which should help in the coming months, but the recovery is more likely to materialize next year than this quarter," said Dominique Barbet, economist at BNP Paribas.

Of the two reports, France's appears to be of greater concern. The unemployment rate is high and sentiment remains weak amid concerns over the government's economic policies. In contrast, German unemployment is near record lows despite a slight dip in second quarter GDP.

And surveys suggest that consumer sentiment in Germany is set to improve. The GfK survey released last week showed that German confidence is expected to rebound in November, indicating that consumers may have become less concerned about recent global conflicts.

Berenberg's Mr. Schulz said the fundamental outlook for German consumption remains strong. Wages rose 3.8% on average in the first half of the year in annual comparison, while inflation was 0.7% in October, meaning purchasing power is on the rise.

"As low interest rates create a disincentive to save and job security is high, consumption growth should remain one of the pillars for German economic growth in the coming years, he said.

Ruth Bender in Paris contributed to this article.

Write to Emese Bartha at emese.bartha@wsj.com

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