Germany's consumer confidence is set to improve to a seven-year high in March, reflecting upbeat income expectations amid stable labor market development, a closely watched survey from the market research group GfK showed Wednesday.
The forward-looking consumer confidence index rose to 8.5 points from 8.3 points in February. The index was forecast to remain unchanged at February's originally score of 8.2.
The survey results, based on around 2,000 consumers, indicate that private consumption is playing a key role in economic growth. The market research group predicted 1.5 percent growth in total private consumption during 2014.
The largest Eurozone economy expanded 0.4 percent in the fourth quarter of 2013. Confounding expectations, detailed GDP data suggested no positive contribution to growth from domestic demand.
After five consecutive increases, economic expectations registered a moderate fall of 3.4 points to 31.9 in February, survey data showed.
In contrast to economic expectations, income expectations rose further in February, to 48.6 from 46.2. It improved slightly from the 13-year high of the previous month.
In view of the economic recovery and the extremely stable development on the labor market, consumers are assuming that there will be a greater increase in their incomes again this year.
Willingness to buy almost maintained its seven-year high of the previous month. The relevant index dropped slightly to 48.9 from 50.0 in January. Propensity to save also did not register any significant change.
According to GfK, consumers are still confident that the German economy has overcome its weak phase in the previous year and is entering a solid upswing.
In order to establish the upswing more sustainable, it is necessary to restart the investment engine, GfK said. Record low interest rates, gaining momentum in the global economy and lively domestic demand should boost the propensity of companies to invest.
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