German consumer confidence rebounds

25th February 2004, Comments 0 comments

25 February 2004 , NUREMBERG - In a fresh ray of hope for Europe's largest economy, consumer confidence in Germany has shown a sharp upturn to record the strongest rise since the introduction of the euro, a German market research unit reported Wednesday. The GfK consumer market research company said that its index of consumer confidence in the overall economy rose 8 points from January to a reading of 2.0 in February. A year ago, the index was 28 points lower. The company, which each month surveys 2,000 pe

25 February 2004

NUREMBERG - In a fresh ray of hope for Europe's largest economy, consumer confidence in Germany has shown a sharp upturn to record the strongest rise since the introduction of the euro, a German market research unit reported Wednesday.

The GfK consumer market research company said that its index of consumer confidence in the overall economy rose 8 points from January to a reading of 2.0 in February. A year ago, the index was 28 points lower.

The company, which each month surveys 2,000 people to take a measure on their mood about the economy and consumption, said that Germans were also more upbeat about their earnings prospects.

This part of the survey showed a surprising rise of 14 points to a reading of minus 0.3, the GfK said, noting that one year ago, the reading was minus 20.9.

In addition, German consumers' tendency now to go out and spend money on consumer items had grown by 16 points in February.

The rise in consumer confidence has come at the same time that the business mood in Germany grew gloomy, after the Munich-based ifo institut on Tuesday reported a decline in the business climate.

But the GfK survey will add to hopes that German consumers, who have been very reluctant to open their wallets, might now start to spend and result in private consumption adding to the signs of recovery in Germany after three years of stagnation.

Up until now, exports have been the driving force behind the modest economic upswing that has emerged in the country.

GfK chief executive Klaus Wuebbenhorst said there was no real contradiction between his institute’s survey and the Ifo reading. He noted that the business mood drop was attributed to worries about the strong euro on the overall economy, something which did not bother consumers.

"What interests the consumer is whether he has more money in his wage packet," Wuebbenhorst told Deutsche Presse-Agentur dpa. The Berlin government's tax reform to lower Germans' taxes was showing its first effects.

He said that the conditions were now set in Germany for the mood among consumers to rise further, but warned against any raising of the value-added tax.

"A debate about raising the value-added tax would be poison," Wuebberhorst said.

He said that so far, the improved feeling among consumers had not yet produced a real spending rise. "First you have to feel good, and only then do you reach for your wallet," the GfK executive said.

 

DPA
Subject: German news
 

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