Bloomberg News

GfK Says German Consumer Confidence Will Rise in July on Economy

June 28, 2011

June 28 (Bloomberg) -- German consumer confidence will rise for the first time in four months in July as stronger-than- expected economic growth offsets uncertainty over the sovereign debt crisis, GfK said.

The Nuremburg-based market research company today forecast that its consumer sentiment index, based on a survey of about 2,000 people, will increase to 5.7 next month from a revised 5.6 in June. Economists predicted a decline to 5.3 from the initial June estimate of 5.5, according to the median of 25 estimates in a Bloomberg News survey.

Germany’s Bundesbank this month raised its growth forecast for 2011 to 3.1 percent from 2.5 percent after Europe’s largest economy expanded 1.5 percent in the first quarter. With exports to Asia booming, German companies have stepped up hiring, sending unemployment to a two-decade low and boosting household spending even as Greece’s debt crisis rattles financial markets.

“The continued upward momentum of the German economy and further recovery of the labor market have triggered a moderate rise in economic expectations and a strong increase in income expectations among Germans,” GfK said in a statement. “Good general conditions” have again become “more influential than detrimental factors, such as the state of affairs in Greece.”

GfK’s measure of households’ economic expectations rose to 50.3 points in June from 46.1 in May. A gauge of income expectations jumped to 44.6 from 25.9, while an index of consumers’ willingness to spend climbed to 35.1 from 31.5.

TUI AG, Europe’s largest tour operator, said on June 26 that bookings at its German unit rose this summer compared to last year. TUI’s hotels, specialized tourism and more families traveling helped drive growth, TUI said.

Still, rising prices may hurt consumer spending. German inflation will accelerate to 2.5 percent in June from 2.4 percent in May, according to a Bloomberg survey of 19 economists. That report is due later today.

--Editors: Matthew Brockett

To contact the reporter on this story: Jeff Black in Frankfurt at Jblack25@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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