Germany: Consumer confidence jumps to highest level in over five years
May 24, 2013
Consumer sentiment continues to improve, as low inflation and positive the developments in the labour market prompt households to buy big ticket items. In June, the GfK forward-looking consumer confidence indicator rose to 6.5 points from the 6.2 points registered in May. The reading, which exceeded market expectations of an unchanged figure, represents the highest level in five and a half years.
While the overall consumer confidence index refers to June, GfK also reports three sub-indicators, which refer to May. According to GfK, consumers' economic expectations as well as income prospects improved compared to the previous month, as households remain optimistic about the labour market and easing inflation in Germany. Building on higher economic and income prospects, consumers' willingness to buy rose over the previous month, sustaining a healthy buying sentiment among consumers, as they are less worried about job losses in the coming months.
GfK added that "whether the consumer mood can remain on this good level ostensibly depends on the current extremely good situation in Germany being maintained. However, if the debt crisis escalates once again, the consumer climate is likely to hit hard times".
FocusEconomics Consensus Forecast panellists anticipate private consumption to expand 0.8% this year, which is unchanged from last month's estimate. For 2014, panellists see private consumption growing 1.1%.
Author: Ricardo Aceves, Senior Economist