Consumer confidence rises in Germany

28 May 2012

BERLIN: Consumer confidence is rising in Germany despite the challenging financial climate facing Europe's largest economy, a study has shown.

GfK, the research firm, polled 2,000 adults in the country, and revealed that its overall barometer of popular sentiment stood at 5.7 points in May, a figure likely to remain unchanged for July.

More specifically, the company reported that the indicator covering public perceptions of the national fiscal outlook climbed by more than 11 points in May, to 19.6 points overall.

This followed on from successive improvements of 1.3 points in March and April, and seemingly contradicted widespread concerns about the stability of many countries using the euro.

"Despite recessionary trends in Europe and rising uncertainty as a consequence of the debt crisis, Germans feel that the national economy is continuing its upswing," GfK said.

"Although the general elections in France and Greece caused further anxiety on the financial markets in particular, they do not appear to have dampened the economic mood."

In demonstration of the positive processes at work in Germany, GDP expanded by 0.5% during the first three months of 2012 when compared with the final quarter of 2011. Unemployment also fell 1.5% in Q1 this year on an annual basis.

However, participants in GfK's poll were more muted when assessing their personal income expectations. Totals here fell by one point to 32 points month on month, although this still constitutes a "very good level", the report added.

Contributors also anticipated that income levels would rise more rapidly this year than in the recent past, although inflation may exert a negative influence on their purchasing power.

Such worries about rising prices did not stop the "willingness to buy" index improving by 4.4 points, to 32 points overall, and now largely matching the total posted at the same time last year.

"Conversely, the uncertain international situation at present as a result of the debt crisis carries considerable risk potential for the German domestic economy," GfK warned.

"If events in Greece and other eurozone countries intensify or even escalate further, the favourable buying mood could very quickly be brought to a standstill."

Data sourced from GfK; additional content by Warc staff