German consumer confidence rises

27 October 2010

NUREMBERG: Consumer confidence in Germany increased for the fifth month in a row in October 2010, according to a new report from GfK.

A figure of 4.9 points was registered for the month, with confidence levels also forecast to stay static in November.

This positive outlook has come despite the continuing effects of the global economic downturn on the German consumers.

With memories of the deep recession Germany suffered in 2009 still fresh, income expectations and propensity to buy metrics showed a decline in September.

But domestic demand is forecast to remain stable over the months to come, due in part to improving labour market conditions, GfK said.

Recent months have seen a drop in reduced working hours, and overall unemployment is also predicted to drop below the three million mark by the end of this month.

Such positive developments potentially allow scope for wage rises in the future.

The ifo Business Climate Index also reports an upturn in economic confidence within companies.

But the picture is not entirely positive, with a lowering of income expectations in October to the August level of 36 points.

More moderate income prospects also resulted in propensity to buy to drop by 8.2 points this month.

But October's level of 22.5 points remains considerably higher than the long term average of zero points.

Overall, consumers remain generally positive in spite of these concerns, and GfK anticipates that consumer spending will increase by 0.5% in 2010.

Data sourced from GfK; additional content by Warc staff