German Consumer Confidence Increases to 15-Month High, GfK Says
German consumer confidence rose to a 15-month high as the economic recovery and falling prices boosted households’ income expectations.
GfK AG’s sentiment index for September, based on a survey of about 2,000 people, increased to 3.7 from a revised 3.4 in August, the Nuremberg-based market-research company said in a statement today. That’s the highest reading since June 2008. Economists expected the index to advance to 3.6 from the initial August estimate of 3.5, the median of 28 forecasts in a Bloomberg News survey showed.
The German economy, Europe’s largest, unexpectedly emerged from recession in the second quarter as government stimulus measures, such as a 2,500-euro ($3,557) subsidy for people who scrap an old car to buy a new one, propped up consumption. Business and investor confidence jumped this month, signaling the economic recovery may gather momentum.
“Economic pessimism is continuing to wane,” GfK said in the statement. Also, “inflation is disappearing, meaning people have more money in their pocket. This leads to rising income expectations.”
German consumer prices fell 0.7 percent in July from a year earlier, the first annual drop in more than 22 years. Oil prices have more than halved from their peak last year.
GfK’s measure of economic expectations rose to minus 7.5 from minus 14. A gauge of income expectations jumped to 8.8 from 1.8 and an index of consumers’ propensity to spend increased to 31.1 from 25.1.
The government of Chancellor Angela Merkel, who will seek a second term in office in national elections on Sept. 27, is spending about 85 billion euros ($121 billion) to revive the economy, which it predicts will contract 6 percent this year.
The Bundesbank expects unemployment to rise to 10.5 percent next year from 8.3 percent today.
GfK said further gains in consumer confidence will depend on how much the labor market deteriorates. “A strong increase in joblessness would certainly weigh on the consumer climate,” it said.