This month, the consumer confidence indicator jumped 6.9 points to 53.5, the highest level for around three years. Expectations for the overall economy and personal income have increased significantly, while propensity to buy is at a good level.
GfK said that German citizens also believe that the domestic economy will remain on track for recovery despite an expected slowdown in growth in the third quarter. “The decisive factor in the strong sentiment among consumers is the extremely positive development of the employment market,” it said.
“If the environment continues to develop in a similarly positive manner over the coming months and the consumer climate enjoys further stimulation, private consumption will perform better than originally forecast by GfK, with growth of up to 0.5 per cent rather than stagnation as a realistic possibility,” it added.
ING economist Carsten Brzeski said: “After almost a lost decade for German consumption, caused by flat real wages, high unemployment and pre-cautionary saving, a trend reversal is materialising and growth impediments are becoming growth drivers.”
In a separate report, German headline inflation accelerated slightly in September, with the year-on-year rate rising to 1.3 per cent from one per cent in August. This was as a result of base effects from food and oil and the monthly rate fell 0.1 per cent.