German consumer confidence will climb to a five-year high in November as rising wages and unemployment at a two-decade low outweigh concerns about the sovereign debt crisis and slowing economic growth, GfK SE (GFK) said.
The market research company today forecast that its consumer-sentiment index, based on a survey of about 2,000 people, will increase to 6.3 from a revised 6.1 in October. That would be the highest since October 2007. Economists predicted an unchanged reading from GfK’s initial 5.9 estimate for October, according to the median of 25 estimates in a Bloomberg News survey.
While business confidence in Germany is at its lowest in more than 2 1/2 years and economic growth is slowing, the country’s jobless rate has held at a two-decade low of 6.8 percent since December, boosting household purchasing power. Financial markets have also rallied since the European Central Bank pledged to do whatever it takes to preserve the euro, easing concerns about the debt crisis.
“Although the reduction in unemployment has recently come to a halt, experts anticipate a steady level of employment in the coming year, despite the economic slowdown,” Nuremberg- based GfK said in a statement. “Together with the positive trend in wages and salaries, which also climbed in real terms, the labor market currently provides key support for income expectations.”
A measure of income expectations climbed to 29.9 in October from 23.9 in September and a gauge of economic expectations rose 1.4 points to minus 15.8, GfK said. An index measuring willingness to spend increased to 33.9 from 33.1.
While the German economy “continues to be in a robust shape,” there are increasing signs “that a perceptible expansion of economic growth in the third quarter of 2012 will be followed by stagnation or even a slight decrease in gross domestic product in the final quarter of the year,” the Bundesbank said in its monthly report on Oct. 22.
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