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Consumption

German consumers unfazed by eurozone recession fears

A fresh survey has shown that Germans remain in spending mood despite an unresolved euro area debt crisis. The study singled out consumers as a current pillar of economic growth in Europe's biggest economy.

The latest household confidence survey presented by the GfK market researchers on Friday saw the group's benchmark index rise to 6.5 points in June from 6.2 points in May.

The monthly reading is based on responses from about 2,000 German consumers regarding their expectations about pay and the economy as a whole in the coming months as well as their willingness to spend money.

"Even though the European Commission has forecast a recession for the eurozone this year, German consumers are not letting this sour their optimism," GfK said in a statement. "The sources of their optimism are the favorable and stable framework conditions, the high level of employment, wage hikes and slowing inflation."

Good news for the German economy

More to spend

The confidence index for June was at its highest level in almost seven years, GfK market expert Rolf Bürkl noted.

He assumed that the decision of the European Central Bank (ECB) to bring down historically low interest rates even further had contributed to the people's willingness to spend more money as saving it was not promising any reasonable yields for a long time to come.

"German consumers constituted the only pillar of growth in the first quarter of the year," Berenberg Bank economist Christian Schulz commented. "The prevented Germany from sliding into recession and it looks as if consumers will continue to play a decisive role in this."

hg/rc (AFP, Reuters)

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