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German Consumer Sentiment Set To Improve Further In March: GfK

German Consumer Sentiment Set To Improve Further In March: GfK

Confidence among German households is set to improve for the second straight month in March, with expectations turning more optimistic as the financial crisis in the euro area is calming down, fueling hopes that recovery will gather momentum in the early months of the year, a monthly survey revealed Wednesday.

The results of a forward-looking survey by the GfK showed that the consumer confidence index based on the survey will rise to 5.9 in March from 5.8 in February, marking the second consecutive monthly growth. The projected figure matched economists' forecast.

Consumers expect that activity in the Europe's largest economy will steadily improve in the coming months. The improvement in the overall sentiment was also boosted by the stable state of the labor market despite unemployment staying high during the winter due to seasonal factors.

Meanwhile, consumers' expectations for income growth turned slightly pessimistic, with the corresponding sub-index shedding 4.2 points in February. However, their propensity to make major purchases turned more positive.

Consumers' expectations for the economy improved significantly, with the relevant indicator rising 8.8 points to -2.5 in February, indicating that respondents expect the economy to stop cooling and recover modestly in the coming months.

Last week, a survey by the Ifo Institute showed that an indicator of sentiment among German businesses improved to a ten-month high of 107.4 in February from January's reading of 104.3.

Another survey by the Center for European Economic Research, or ZEW, showed that economic confidence among Germans rose significantly this month to the strongest level since April 2010 amid hopes that the situation may improve over the coming months.

Bundesbank expects the German economy to return to growth in the first quarter and sees a 0.4 percent expansion for the whole of 2013. The economy contracted 0.6 percent in the final quarter of 2012 following a 0.2 percent rise in the third quarter. For the whole of 2012, growth remained unchanged at 0.7 percent.

Meanwhile, the 17-nation currency bloc of the eurozone moved deeper into recession at the end of 2012 with its GDP shrinking the most since the first quarter of 2009.

by RTT Staff Writer

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