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Shoppers spending cash despite recession

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Shoppers spending cash despite recession
Photo: DPA
08:34 CEST+02:00
Despite the worst economic crisis since 1945, German consumers are ever more confident in the future and increasingly willing to part with their hard-earned cash, a closely-watched survey said on Monday.

The GfK consumer confidence index rose to an estimated 3.5 points in August from a revised 3.0 points in July, the GfK institute said in a statement.

A sub-index measuring consumers' willingness to buy rose dramatically to 25.1 points from 14.5 points in July and from minus 26.2 in August 2008.

The institute said low inflation had made consumers more eager to rush out

and make purchases, in addition to a relatively stable labour market, despite the crisis.

Unemployment figures would play a key role in the future development of consumer sentiment, the GfK institute said.

"A long-lasting stabilisation of the consumer climate will depend on how the labour market develops in the future. If the unemployment figures climb

high in late autumn, this will be a test for consumer confidence," GfK said.

The survey is the latest to suggest that Europe's top economy could be rebounding from its worst slowdown in recent history.

A study by Ernst and Young published in daily Die Welt on Monday showed that two out of three firms in Germany believe the economy will improve by 2010, rising to nearly eight in ten companies seeing a brighter future by 2011.

Moreover, 54 percent of the businesses polled said that Germany was likely to emerge stronger after the crisis than it was before.

On Friday, a closely-watched survey by the Ifo institute, measuring the mood among German firms, rose for the fourth month running in July.

Nevertheless, the government still sees Germany - one of the world's top exporters - shrinking by a record six percent this year.

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