Consumers join businesses in party mood
German consumers are feeling upbeat following their country’s strong performance in the football World Cup, the warm summer weather and the good news from the job market, the GfK consumer climate study for July has found.
On the back of an Ifo economic institute report showing Germany’s business climate had managed the biggest monthly improvement since reunification, the new figures released Tuesday by GfK reveal that consumers, as well as businesses, believe the economic picture is rosy.
“Economic expectations rose sharply in July. Income expectations also gained significant ground and compensated for the losses of the previous month,” the Nuremberg-based economic researchers said in their report.
Only the “propensity to buy” figure dipped slightly, though it was still “extremely good and is well above the long-term average,” the institute said.
While the performance of Schweinsteiger and co., coupled with the warm weather, seemed to have lifted consumers’ spirits, they were also buoyed by unexpectedly strong data from the job market.
“Consumers expect the recovery of the German economy not only to continue further but even to gain additional momentum,” the report said. ''As well as psychological factors, this economic optimism is also supported by hard facts.”
Many economic forecasters are expecting the number of unemployed to fall below three million this autumn. In its June forecast, the Germany Bundesbank predicted GDP growth this year of 1.9 percent, while the Institute of Economic Research (DIW) is even more optimistic, predicting 2.1 percent growth.