Germany: Consumer confidence rises to highest level in more than three years
February 22, 2011
Consumer sentiment sits at its most optimistic level in more than three years, fuelled by better income prospects and low unemployment. The forward-looking GfK consumer confidence indicator rose to 6.0 points in March, up from the revised 5.8 points registered in February (previously reported: 5.7 points). The reading surprised private sector analysts who had anticipated that the index would remain steady at 5.8 points and marked the highest level since October 2007, suggesting that private consumption will remain healthy in the months ahead. GfK's overall consumer indicator refers to March, but the institute also published three sub-indices (economic expectations, income expectations and buying propensity), which refer to February. According to the survey, income expectations bounced back in February, rising to 42.9 points, which more than compensated for a decrease observed in January. The increase reflected consumers' optimism that the German business environment and the labour market will remain favourable. Meanwhile, economic expectations and the propensity to buy fell slightly over the previous month. However, they remain at high levels, suggesting a positive prevailing mood.
Author: Ricardo Aceves, Senior Economist