Confidence among German consumers is set to remain stable in June, as the country's vibrant labor market and export gains shielded the economy from the turbulent economic conditions in the rest of Eurozone.
The consumer confidence index for June was at 5.7, unchanged from the revised reading of May. The May score was revised from 5.6 reported previously.
Consumers are considerably more optimistic in May than in the previous month and the willingness to buy also improved slightly, GfK said in its latest report.
The economic expectations index improved by more than 11 points to 19.6 in May. "Despite recessionary trends in Europe and rising uncertainty as a consequence of the debt crisis, Germans feel that the national economy is continuing its upswing," the report noted.
According to GfK, general elections in France and Greece didn't so far have negative impact on German optimism.
The indicator for willingness to buy durable goods recovered partly from its steep drop in the previous month, rising 4.4 points to 32 in May. Reduced concerns about unemployment and a marginal fall in inflation expectations contributed to the positive development in the consumer mood, GfK said.
The upbeat mood over the economic prospects didn't seem to have any significant impact on German's income expectations. The relevant indicator fell to 32 from 33 in April.
Today's GfK report contradicted Thursday's Ifo Institute business confidence survey results, which pointed to a marked decline in business optimism amid tensions surrounding a possible Greek exit from Eurozone.
Ifo observed that increasing uncertainty in the Eurozone is impacting the German economy.
GfK also warned that the uncertain international situation at present as a result of the debt crisis carries considerable risk potential for the German domestic economy. "If events in Greece and other eurozone countries intensify or even escalate further, the favorable buying mood could very quickly be
brought to a standstill," it added.
The economy grew 0.5 percent quarter-on-quarter in the first quarter after a 0.2 percent contraction in the fourth quarter.
The Organization for Economic Co-operation and Development expects Germany to grow 1.2 percent in 2012 and by 2 percent next year. In its latest economic outlook report, the OECD said activity will pick up further as confidence improves and domestic demand strengthens.
by RTT Staff Writer
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