Bloomberg News

German Consumer Confidence Will Increase in February, GfK Says

January 26, 2012

Jan. 26 (Bloomberg) -- German consumer confidence will increase in February as falling unemployment boosts the economic outlook and households’ willingness to spend even as Europe’s debt crisis remains unresolved, GfK SE said.

The Nuremberg-based market research company forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 5.9 from revised 5.7 this month. Economists predicted it would remain unchanged from the initial January reading of 5.6, according to the median of 26 estimates in a Bloomberg News survey.

Unemployment in Europe’s largest economy is at a two-decade low of 6.8 percent, supporting consumer spending and helping to limit the impact of the euro-region turmoil. Business confidence jumped to the highest in six months in January and the International Monetary Fund said Jan. 24 the economy will weather a recession in the euro region and keep growing.

“German consumers are defying Europe’s recession trends,” GfK said in a statement. “To ensure consumer spending can support the economy in the face of a weaker global economy,” it is “vital that decision makers do everything needed to re- establish trust.”

GfK’s gauge of economic optimism surged to 7.5 in January from minus 0.9 in December, and an index of income expectations increased to 34.1 from 34. A measure of consumers’ willingness to spend rose to 41.8 from 27.4.

Germany’s statistics office said Jan. 11 that the economy probably shrank about 0.25 percent in the fourth quarter. Growth slowed to 3 percent in 2011 from 3.7 percent in 2010, which was the most since German reunification two decades ago.

The country’s economic upswing has only come to “a temporary halt,” Bundesbank President Jens Weidmann said on Jan. 23. While growth may stagnate in the first three months of 2012, “dynamism should return in the course of the year.”

The IMF forecast growth of 0.3 percent in 2012. While that’s lower than its previous estimate, it compares with a contraction of 0.5 percent predicted for the euro region.

--Editors: Fergal O’Brien, Jennifer M. Freedman

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

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


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