German GfK consumer sentiment picks up heading into December

[BERLIN] German consumer morale improved for a second month heading into December, suggesting a brighter ending to the year for Europe's biggest economy after it narrowly avoided a recession in the third quarter.

Market research group GfK said on Thursday that its forward-looking consumer sentiment indicator, based on a survey of around 2,000 Germans, rose to 8.7 going into December from 8.5 in November. "The consumer climate is improving as the year draws to a close," GfK said.

Uncertainty linked to geopolitical tensions - reflected in a drop in the economic expectations component of the index - had not yet dampened income outlooks or willingness to spend, GfK said. But it warned that a deepening of the crises in places like Ukraine and the Middle East could undermine consumption as pillar of the German economy.

The results matched the highest estimate in a Reuters poll of 19 economists. The consensus forecast had been for a reading of 8.6.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop in comparison with the same period a year ago.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 per cent in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?" The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.

REUTERS