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German Consumer Confidence Hits 6 ½ year High: GfK

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German Consumer Confidence Hits 6 ½ year High: GfK

Germany’s consumer climate rose to the highest level since 2007, as domestic recovery in Europe’s largest economy gathers pace.

Germany’s consumer confidence index, courtesy of the GfK Group, rose from 7.6 to 8.2 in February, beating forecasts. The February reading, which was based on a survey of around 2,000 people, was the highest since August 2007.

Consumer sentiment was higher across the board, a sign domestic consumption will continue to drive German recovery in 2014. Economic expectations rose for the fifth consecutive month, while income expectations rose to the highest level in 13 years. Rising economic and income expectations translated into a greater willingness to spend. The gauge of consumer willingness to spend reached a seven-year high, as brighter labour market prospects continued to provide consumers with planning security.

“Germans consider the domestic economy to be clearly on the upturn at present,” read an official press release from GfK. “Consumption was… essentially responsible for ensuring that Germany did not slip into recession in 2013 and instead registered marginal growth of 0.4 percent. Consequently, it grew at more than twice the pace of overall GDP.”

Domestic consumption was the main catalyst of economic growth in 2013. Germany’s export market declined mightily last year, as recession throughout the Eurozone weighed heavily on demand for German products and services. Germany’s export market rose 0.6 percent last year, compared to 3.2 percent in 2012.

The outlook on Germany in 2014 is generally positive. The Bundesbank expects Germany to rebound “strongly” in the first half of the year, while the International Monetary Fund projects the economy to expand at a rate of 1.6 percent in all of 2014.

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