Bloomberg News

German Consumer Confidence Will Climb in November, GfK Says

October 25, 2011

Oct. 25 (Bloomberg) -- German consumer confidence will rise for the first time in eight months in November as higher salaries and improving job prospects temper concern about the euro region’s debt crisis, GfK SE said.

The Nuremberg-based market research company today forecast that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 5.3 next month from 5.2 in October. Economists predicted a drop to 5.1, according to the median of 24 estimates in a Bloomberg News survey.

German business confidence fell to a 16-month low last week as the possibility of a Greek default threatens banks across the 17-member euro area, clouding the outlook for economic growth. At the same time, German unemployment fell for a 27th straight month in September, taking the jobless rate to 6.9 percent, the lowest since reunification two decades ago.

“The pleasing labor-market situation and rising salaries” are making consumers “very optimistic when it comes to income expectations and willingness to buy,” GfK said in a statement. “However, ongoing discussions relating to the government debt crisis and the threat of Greek insolvency, which will also put pressure on the banks, are still unsettling Germans.”

While GfK’s gauge of income expectations rose to 36.5 in October from 35.1 in September, and an index of consumers’ willingness to spend increased to 31.2 from 29.7, a measure of economic expectations fell to minus 6.2 from 4.8.

“The improvement in willingness to buy is not only on account of the slight rise in income expectations, but most likely also influenced by the current debt crisis,” GfK said. “Discussions on the stability of the single currency and banks have shaken consumers’ trust in the financial markets. Consequently, they are currently less inclined to save money for a rainy day.”

Shares in Metro AG, Germany’s biggest retailer, rose on Oct. 20 after Chief Executive Officer Eckhard Cordes reiterated that 2011 earnings will exceed last year’s.

--Editors: Matthew Brockett, Simone Meier

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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