German consumer sentiment rises for second month
GERMAN consumer morale rose for a second consecutive month heading into March as a calming of the euro zone crisis fills Germans with confidence that their economy will pick up in the coming months, market research group GfK said on Wednesday.
The forward-looking consumer sentiment indicator, based on a survey of around 2,000 Germans, rose to 5.9 going into March from 5.8 in February, boosted by an improvement in economic expectations and a greater willingness to buy.
The reading was the highest since November and was in line with a Reuters consensus forecast.
"At present, the European financial crisis is hardly a topic in the media. Players on the financial markets are also acting calmly," GfK said in a statement.
"As a result, Germans are taking a relatively relaxed view of the future. They are anticipating that the German economy will steadily improve in the coming months."
The GfK survey adds to the increasingly upbeat mood in Germany, where other surveys have shown morale among German businesses, investors and analysts improving in February.
Yet while sentiment surveys suggest the German economy will return to solid growth in the first quarter after contracting by 0.6pc in the last three months of 2012, there is so far little hard data to back this up.
RETURN TO GROWTH
Most economists expect Europe's largest economy to grow weakly this quarter and thereby escape the second consecutive quarter of contraction which would technically put Germany in a recession.
Ordinary Germans also expect to see a moderate recovery, GfK said, adding that consumers' expectations for the economy were at a turning point and had improved on the month in large part due to the stable labour market.
German employment is at its highest level since the country reunified more than 20 years ago.
Consumers' expectations for future income fell in February but were still at a high level, with GfK saying Germans remained optimistic overall about their financial situation due to the stable labour market, moderate inflation and the prospect of higher wages linked to a better economic outlook.
German unions are pushing for inflation-busting raises in 2013, confident politicians will back their demands in an election year. Industrial union IG Metall said on Tuesday it was seeking a 5.5pc wage rise for workers in the key state of Baden-Wuerttemberg.
Consumers became more willing to buy goods in February, with the sub-index tracking this rising to 37.0, its highest level in nearly a year, from 35.3 in January.
"Given that consumers continue to be sceptical about the stability of the euro, they are still tending to invest their money in higher value purchases rather than putting it in the bank at historically low interest rates," GfK said.