German consumer confidence at three-year high – poll

German consumer and business confidence are at three-year high points and household spending might accelerate growth in the economy, the biggest in Europe, a GfK poll showed yesterday.

The household sentiment indicator by study institute GfK, published for the month to come, posted a solid gain to 4.9 points from 4.3 in September, a figure which was itself revised higher owing to increased expectations for the economy, jobs and personal incomes.

It was released a few days after the Ifo research institute said business sentiment in Germany also rose in September to levels last seen in mid-2007, suggesting that an expected slowdown will not mean a return to recession.

A breakdown of the Ifo data revealed particular optimism among retailers who assessed the current situation to be the best since a boom that followed German reunification in 1990.

“Consumers currently expect the economic upturn to continue in the coming months,” a GfK statement added.

“This is demonstrated by the sharp rise in economic expectations over the last three months,” it added, which posted a sharp gain to 45.2 points, the highest level since March 2001.

In August, German unemployment was stable at 7.6 per cent of the workforce, and the number of jobless is expected to fall below the psychologically significant figure of three million by the end of the year.

“The decisive factor in the strong sentiment among consumers is the extremely positive development of the employment market,” GfK said.

A measure of consumer’s propensity to buy moved away from a decrease and stagnation seen in previous months and now sits well above its long-term average.

On Monday, the European Central Bank said growth in lending to the eurozone private sector picked up in August, with lending to households in the 16-nation area growing by 2.9 per cent from the same month a year earlier.