German consumer confidence will gain for the first time in five months in July as rising wages outweigh growing concerns that the sovereign debt crisis is damping economic growth, GfK SE (GFK) said.
The Nuremberg-based market research company today forecast that its consumer-sentiment index, based on a survey of about 2,000 people, will increase to 5.8 next month from 5.7 in June. Economists predicted a decline to 5.6, according to the median of 22 estimates in a Bloomberg News survey.
Governments and households across Europe are cutting spending, curbing demand for German goods and hurting growth. German business confidence dropped to a two-year low in June. At the same time, unemployment in Europe’s largest economy is at a two-decade low and workers are winning bigger pay increases, boosting disposable income.
“Evidently there is growing concern that Germany could be drawn further into the downward spiral” created by the debt crisis, GfK said in a statement. “However, Germans regard the international threat as a risk to the economy in general rather than to their personal situation.”
While a gauge of economic optimism slumped to 3 in June from 19.6 in May, an index of income expectations rose to 40.1 from 32, GfK said. A measure of consumers’ willingness to spend increased to 32.7 from 32.
The Bundesbank this month raised its 2012 growth forecast for Germany to 1 percent from 0.6 percent, citing domestic consumption driven by low unemployment.
Still, Metro AG (MEO), Germany’s biggest retailer, in May stuck to a forecast that profit won’t increase this year amid concern that the economy will struggle to grow and consumers will limit spending. Metro shares are down about 18 percent this year.
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