RTTNews - German consumer confidence remained unchanged in June, as economic expectations brightened, offsetting the slight decline in income expectations.

The forward-looking consumer confidence index came in at 2.5 points in June, unchanged from May, market research group GfK said. It matched economists' expectations. The consumer climate in the largest Eurozone economy has remained stable since March.

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 around 2,000 consumer interviews.

The market research group said sustainability of this generally robust development of the consumer climate depends very much on the extent to which job market prospects contract.

If the short-time work measures implemented by companies prove not to generate any identifiable economic revival, organizations will be compelled to introduce staff redundancies, leading to an increased level of unemployment, the GfK said. In turn, this would further fuel fears of job losses and severely impact the consumer climate, it added.

Further, economic expectations improved slightly for the second month in a row. The corresponding indicator showed a reading of minus 28.3 points in May, up 2.9 points from previous month.

The downward trend in the economic climate appears to have halted, at least for the time being, however, whether this represents a turning point in economic recovery remains to be seen, the GfK said. The firm also noted that consumers are assuming that the worst is over in the ongoing economic downturn.

Households' income expectations declined in May after showing an improvement in April. The indicator dropped 1.3 points to reach minus 9.3, reversing an increase of 3.4 points recorded in April.

Moreover, the gauge for consumers' propensity to buy recorded a minimal rise of 0.1 points to reach its current level of 12.5 points.

In tandem with the scrappage allowance on vehicles and other financial incentives relating to economic booster package II, moderate prices are presently keeping the consumer propensity to buy at a stable level, the GfK said.

A day earlier, the Munich-based Ifo Institute for Economic Research said German business sentiment improved in May for the second consecutive month after reaching a record low in March.

Also on Tuesday, Germany's Federal Statistical Office said the economy contracted 3.8% on a sequential basis in the first quarter, which was the fourth straight quarter of decline and biggest fall since records began in 1970.

The first quarter GDP decreased a price-adjusted 6.7% compared to the previous year, much larger than the 1.7% drop seen in the fourth quarter. When calendar-adjusted, the GDP decline was 6.9%.

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