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Consumers shrugging off debt crisis

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Consumers shrugging off debt crisis
Photo: DPA
13:13 CET+01:00
German consumer confidence is holding up in the face of the eurozone debt crisis as rising employment and incomes helped to offset looming recession fears, a poll found on Monday.

GfK released its latest index of household confidence, with the barometer forecast to rise to 5.6 points in December from 5.4 points in November, a statement said.

"Even though the debt crisis has intensified, consumers' propensity to buy has increased markedly," GfK said. "The consumer climate is enjoying a tailwind from rising employment and income and a decreasing tendency among consumers to save."

Nevertheless, consumers are becoming increasingly unnerved by the international crisis and policy makers' failure so far to come with up with any convincing solutions.

"This has resulted in a further decline in economic expectations, which are, in turn, pulling income expectations down with them," GfK said.

The headline consumer confidence index is based on responses from around 2,000 households with regard to their expectations about pay and the economy as a whole in the coming months, as well as their willingness to spend money.

While two sub-indices for income expectations and economic expectations declined compared with the previous month, consumers' willingness to spend rose to its highest level since January, GfK noted.

Books, clothing and toys look set to top this year's gift lists, GfK found in a separate survey, with more and more customers purchasing presents via the internet.

The German retail federation HDE said retailers were satisfied with the start of the Christmas shopping season.

"Richly decorated shop windows and mild temperatures on the first Saturday of Advent translated into good sales, particularly in the city centres," said HDE chief Stefan Genth.

In high demand were tablet computers, smartphones and 3-D televisions, Genth said.

Last week, another leading indicator, the Ifo business climate index, rose unexpectedly for the first time in four months amid signs the German economy - Europe's biggest - is continuing to perform relatively well despite the international turmoil.

AFP/mry

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