German Consumer Optimism Hits Eleven-Month High

24 February 2006

Signs of accelerating economic growth have boosted Germans' optimism to its highest level in eleven months, reports the GfK Consumer Confidence Index.

The survey, based on a sample of around 2,000 people polled earlier this month, aims to forecast household spending for the month ahead. The index rose from 4.6 to 4.8 in February, GfK reported Thursday.

Confidence in Europe's largest economy was further boosted by the popularity of chancellor Angela Merkel whose approval rating rose to a record high.

Comments GfK economist Rolf Buerkl: "It appears that the so-called Merkel effect and positive economic outlook haven't been lost on consumers. Consumer optimism is now more stable than it has been in years."

As an additional measure of confidence, consumers are asked to assess the economy, their personal income expectations, and willingness to spend. All three sub-indices remained above their average level of zero in February for the second consecutive month - a positive indicator that has been absent since May 2001.

Nonetheless, the spectre of unemployment continues to loom large in the German psyche and the nation's appetite for larger purchases continues to wane, plunging from 20.3 to 11.9 as unemployment rose to 11.3% in January.

Without an improvement in the employment situation, people are unlikely to stay confident for long, Buerkl observes.

Data sourced from (Germany); additional content by WARC staff