RTTNews - German consumer confidence strengthened following a period of stability, signaling positive development in July, results of the latest consumer climate survey from the market research firm GfK Group showed Tuesday.
The survey's forward-looking consumer sentiment index rose to 2.9 points for July from a revised value of 2.6 in June. Economists were looking for a reading of 2.5 for July. The index continues to stay at a comparatively low level.
The research group said it is unclear whether this marks the beginning of a sustained recovery in consumer mood. Future developments in the employment market would be decisive.
The Nuremberg-based GfK group conducts the GfK consumer climate MAXX survey each month on behalf of the EU Commission. The survey is based on nearly 2,000 consumer interviews.
The GfK said the rising number of signs that the economic downturn may be coming to an end are raising the hopes of economic stabilization. Accordingly, economic expectations improved for the third consecutive month. This increase may be due to a fairly strong employment market. The indicator measuring economic outlook stood at minus 22.6 in June, up from minus 28.3 in May.
Fall in inflation and the prospects for pensioners of a significant boost to their received pension payments as of July 1, 2009 supported income expectations. Income expectations rose to minus 3.3 from May's minus 9.3. But the expected deterioration on the jobs market would increase unemployment fears and would strain income expectations.
Decrease in inflation is also stimulating the propensity to consume. Further, the fact that consumers have not completely regained their trust in the financial markets is having a positive effect on the propensity to buy. Consumers are likely to invest their disposable income in consumer goods rather than saving. The buying propensity index rose to 14.5 in June from 12.5 last month.
According to the ZEW survey, economic sentiment improved to a three-year high in June on the back of recovery expectations by year-end. The ZEW Indicator of Economic Sentiment stood at 44.8 points in June, up from 31.1 points in May.
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