Improvement In German Consumer Sentiment Continues: GfK

Sponsored Links

Consumer confidence in Germany is continuing to improve at the beginning of autumn with less severe decline in the economy than was feared several months ago.

Reaching the highest level in 16 months, the forward-looking consumer confidence index stood at 4.3 points for October, up from 3.8 points in September, survey results published by the Nuremberg-based GfK Group showed Friday. The reading for September was revised from 3.7 points.

The GfK conducts its consumer climate MAXX survey each month on behalf of the EU Commission. The survey is based on nearly 2,000 consumer interviews.

All the three sub indices of the consumer confidence index that refer to September improved. The income expectations index recorded a fourth consecutive increase in September as the government's second stimulus package supported private households and low inflation raised the purchasing power of consumers. The indicator now stands at 16 points, up from 8.8 in August. A higher figure has not been recorded since July 2007, the market research agency said.

Future outlook of consumers is becoming increasingly optimistic with the economic outlook rising for a sixth month in a row. The economic outlook index rose to 3.4 points in September from a negative reading of 7.5 in August. Consumers' view is evidently being increasingly shaped by the recognition that the "worst" is behind them and they can now look to the future with greater optimism, said GfK.

Experts expect the labor market to suffer a less dramatic slump than was originally feared a few months ago. Employers also assess economic development in Germany as more positive.

The index measuring propensity to buy showed a reading of 36.5 versus August's 31.1. Historically low level price expectations supported the propensity to consume. A clear downward trend in inflation expectations has a stimulating effect on the propensity to buy. The research group said the feared slump on the labor market has not yet materialized, supporting the positive mood.

According to the latest Ifo survey, business confidence rose for a sixth month in September to reach a 12-month high. The business climate for the German industry and trade stood at 91.3 in September.

The biggest Eurozone economy recovered in the second quarter by growing 0.3% compared to the first quarter. Continuing increase in the economic sentiment, though slower, is expected to work in favor of German Chancellor Angela Merkel, who is seeking a second term. Germany is set to hold its 17th federal election on September 27.

Consumer confidence in Germany is continuing to improve at the beginning of autumn with less severe decline in the economy than was feared several months ago. (Market News Provided by RTTNews)