German consumer climate improves: GfK
German consumer confidence in economic activity rose to the highest level in six years, as shoppers look ahead to the holiday season.
The closely monitored Consumer Climate indicator, courtesy of GfK, rose to 7.4 points in December, up from a value of 7.1 in November. Most analysts expected consumer confidence to stagnate toward the end of the year amid growing concerns in the euro area.
The GfK Consumer Climate MAXX Survey is based on interviews with 2,000 Germany consumers, conducted on behalf of the European Commission.
Germans were considerably more optimistic about economic and income prospects leading up to the holiday season. Willingness to buy soared to a seven-year high, a positive sign for German retailers. Favourable developments in employment and income growth, combined with the European Central Bank’s recent decision to slash interest rates, has created a better environment for spending, the report concluded.
“Consumers are evidently expecting the German economy, which is currently on an upward trend, to pick up further and gain even more momentum in the coming months,” according to GfK.
The same optimism is shared by the German Council of Economic Experts, which expects Germany’s gross domestic product to expand 1.6 percent in 2014 after a moderate 0.4 percent hike this year. The experts cited “international economic revival” as the main catalyst for next year’s growth. Earlier this month it was reported Germany’s manufacturing industry reached its highest level in more than two years, led by higher business volumes and greater export demand.
The German economy continues to gather momentum, a trend that hasn’t gone unnoticed among consumers. Europe’s largest economy accelerated 0.3 percent in the third quarter. While the growth rate was down from the previous quarter’s 0.7 percent rate, Germany continues to outpace the rest of the euro region.
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