By Sophie Duvernoy
BERLIN, Sept 25 (Reuters) – German consumer confidence rose
to its highest level in six years heading into October,
supporting expectations strong consumer spending will help
Europe’s largest economy to post moderate growth in 2013.
GfK market research group said on Wednesday its
forward-looking consumer sentiment indicator, based on a survey
of around 2,000 people, rose to 7.1 going into October from an
upwardly revised 7.0 the previous month.
The original September figure was 6.9 and analysts in a
Reuters poll had forecast the October reading at 7.0. The
strengthening data chimed with other recent releases suggesting
gradual but steady growth for the end of the year.
“German consumers are expecting the economy to gain momentum
in the next few months,” GfK said in a statement. “There is a
clear upwards trend.”
Germans, traditionally savers, became more willing to spend
in September than at any point since December 2006, encouraged
by an essentially stable job market and historically low
interest rates. Saving appeared less attractive as inflation
overtook bank interest rates.
A sub-index tracking consumers’ income expectations eased,
albeit from a high level, due to rising food prices, which
dampened perceived purchasing power.
“It’s also possible that some consumers fear further
financial burdens due to the euro crisis or tax hikes,” the GfK
said, referring to the outcome of the German election which was
still uncertain at the time of the survey.
Angela Merkel’s conservatives romped to victory in Sunday’s
election, winning 42 percent of the vote, but are in need of a
coalition partner after falling just short of a parliamentary
majority.
The chancellor appeared headed towards coalition talks with
her main centre-left rivals the Social Democrats (SPD), who had
campaigned on a platform of tax increases for Germany’s highest
earners.
Concern over income was offset by strong willingness to buy,
which the GfK dubbed “euphoric”.
The GfK reiterated its forecast for private consumption to
grow by around 1 percent in real terms in 2013, a sign that the
German economy is on track to grow moderately this year.
The Berlin-based economic think tank DIW forecasts that the
economy will expand by 0.4 percent in 2013, and 1.7 percent in
2014.
A bastion of strength in the early stages of the euro zone
crisis, the German economy shrank at the end of last year and
narrowly avoided recession early in 2013 before bouncing back.
Recent data from Germany has been mixed, with the private
sector expanding, unemployment falling and business sentiment
brightening, though industrial data has been weak and exports
have dropped.
Consumers’ view of the economy in September improved
significantly from the previous month to hit 10.7 points, its
highest level since May 2012.
Separately, according to the Ifo Institute business morale
improved slightly to its highest level in 17 months in
September.
(Reporting by Sophie Duvernoy; Editing by Ruth Pitchford)
