German Consumers Plan to Up Spending

31 March 2006

As soccer World Cup fever heats up, the tournament's German hosts have caught the bug and are preparing for a spendfest.

Researcher GfK says its forward-looking consumer climate indicator rose to 5.1 points for April, up from a revised March reading of 5.0 points. The March figure was revised upward from an initial estimate of 4.8.

The survey also found Germans' willingness to spend had risen by 7.6 points to 19.5, some 32 points higher than the negative rating the same time a year ago.

GfK added that many of the nation's consumers were ready to buy larger television sets and DVD recorders to watch June's soccer carnival.

Avers the researcher: "It is thought that the willingness to make purchases has been boosted by anticipation of the World Cup, which should bring added impetus to electronics, in particular."

Next year's rise in sales tax is also likely to be a spur for consumers to spend cash now.

The figures have raised hopes that private consumption will climb 0.5% this year, after remaining stagnant through 2005.

Munich-based Ifo Institute, a leading economic researcher, appears to confirm the optimistic outlook. Its closely-watched index of business confidence rose in March to its highest level since 1991, the boom period after reunification.

Comments Dresdner Kleinwort Wasserstein analyst Rainer Guntermann: "The preference to creating jobs is increasing and fear of unemployment among people has decreased."

But Jörg Lüschow of consulting group WestLB sounds a note of caution: "In the end, what people really spend is what's decisive, not what they're planning on spending."

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