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German Consumer Morale Set To Recover On Upbeat Job, Income Outlook


German consumer mood is set to rebound in February as households expect their future income to increase further as the economy emerges from the lull induced by the euro area debt crisis, a monthly survey by GfK revealed Tuesday.

The consumer confidence index for February rose to 5.8 from 5.7 in January. This was the first increase in the forward-looking index in three months. Economists had expected the index to remain unchanged at the January level.

According to the survey, income expectations and willingness to buy have improved noticeably in January and the economic outlook is also a little less pessimistic than in the previous month.

A gauge of Germans' income expectations increased almost 15 points to 36 points, its highest level since July 2012. This optimism is predominantly based on the assumption that the employment situation in Germany will continue to see stable development this year, GfK said.

In addition, an expected moderation in inflation in 2013 is also expected to strengthen the purchasing power of income.

As a result, the number of consumers planning to invest in high value goods at present have increased over the month. The indicator measuring willingness to buy big-ticket items rose by 15.2 points to 35.3 reversing a 9-point fall in the previous month.

Following the slight drop at the end of 2012, consumers economic outlook improved again in January. The indicator rose 6.6 points, more than offsetting December's fall. At present, the indicator is at -11.3 points.

The survey results are based on around 2,000 consumer interviews conducted each month on behalf of the EU Commission.

The German economy is estimated to have contracted 0.5 percent in the final quarter of 2012. Both the government and the central bank forecast 0.4 percent GDP expansion for 2013 after 0.7 percent growth in 2012.

In its latest monthly report, the Bundesbank said Germany's economic slowdown is likely to be short-lived, as the biggest euro area economy's prospects have improved at the beginning of the year.

Separately, a survey by Insee revealed today that the French consumer confidence remained unchanged in January, but there was a marginal deterioration in their expectations for personal as well as general economic situation one year ahead.

by RTTNews Staff Writer

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