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German consumer sentiment strongest since 2001

Staff writer |
German consumer confidence is set to rise to its highest level since October 2001 as consumer optimism turned stronger underpinned by upward trend in economic expectations, data from a survey by GfK showed.

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The forward-looking consumer confidence index rose more than expected to 9.7 in March from 9.3 in February. The index was forecast to rise to 9.5. This was the highest score since October 2001.

Confidence remains on the upswing in Germany, the GfK said. Consumers are seemingly not be greatly affected by the recent escalation of the situation in eastern Ukraine, the ongoing tensions between Russia and the West as well as events in Greece.

Private consumer spending will once again play a key role in economic development this year, it said. The fall in energy prices boosted purchasing power, giving some freedom to make other purchases.

The three sub-components of the consumer confidence index, namely economic and income expectations and willingness to buy improved further in February.

The economic expectations index rose significantly for the third month in February. The index rose 4.7 points to 27.2.

Germans remain confident that their economy is clearly on course for growth. Low inflation and a weak euro in the wake of the European Central Bank's expansionary monetary policy are generating the necessary momentum, the research group said.

Income outlook of consumers improved further in February. The income expectations indicator gained 2.8 to 50.6 points. The fall in fuel prices pushed inflation below zero in January. Combined with the extremely stable labor market situation, there were substantial improvements in real income.

Germans' willingness to buy improved for the fifth time in succession in February. The corresponding index rose 1.7 to 59.1. It topped the eight-year peak of the previous month. A higher value of 59.9 was last seen in December 2006.

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