Consumer confidence spikes sharply
29 May 2006, BERLIN - German consumer confidence climbed to its highest level in more than four years, a survey released Monday showed, underscoring hopes about the upswing in Europe's biggest economy.
29 May 2006
BERLIN - German consumer confidence climbed to its highest level in more than four years, a survey released Monday showed, underscoring hopes about the upswing in Europe's biggest economy.
The Nuremberg-based GfK market research institute said its forward-looking consumer climate index will rise to 6.8 points in June from a revised 5.8 points this month. The GfK had previously predicted the index would come in at 5.5 points in May.
Based on a survey of 2,000 Germans, the index rise comes in the build-up to next month's launch of the World Cup football championships in Germany, with households prepared to spend more in coming months, the survey said.
The projected increase in June pushed the indicator to its highest level since December 2001 with the optimism among German consumers also underpinned by the nation's economic strong performance in recent months.
"The growing optimism among consumers is probably due in part to the positive view of the current economic trend in Germany," Nuremberg-based GfK said releasing the survey.
"Rising private consumption is likely to make a positive contribution towards an economic recovery alongside with investment linked to domestic demand," it said.
The GfK also forecast that the strong showing by its index would translate into a pickup in consumer spending, which has been a drag on German growth in recent years.
"With the end of the long winter, the mood among consumers has significantly brightened," GfK economist Rolf Buerkl said commenting on the index.
He said that optimism about the outlook for the German economy has grown along with expectations for a modest pickup in personal income.
Buerkl said the institute expects private consumption to grow this year by 0.5 per cent, highlighting that the strong performance by Germany's export machine was starting to feed through to the rest of the economy.
Official data released last week showed private consumption emerging as helping to power economic growth in the nation during the first quarter.
But the institute also warned that there is a greater awareness among German consumers of the price rises which will follow the government's planned hefty increase in VAT at the start of next year.
Subject: German News