German consumer confidence unexpectedly held steady for a third month as slower inflation boosted household purchasing power and the recession showed first signs of easing.
GfK AG’s confidence index for May, based on a survey of about 2,000 people, was unchanged from April at 2.5 per cent, the Nuremberg-based market-research company said in a statement today.
April’s result was revised up from 2.4.
German business and investor confidence increased this month on hopes that interest-rate cuts and government stimulus packages will lift the economy out of its worst recession in over six decades.
Germany’s leading economic institutes predict the economy, Europe’s largest, will shrink by 6 per cent this year.
“The consumer climate remains robust overall, despite an economic environment which is generally recessive,” GfK said in a statement.
“However, the index remains at a very low level.”
GfK’s measure of economic expectations in Germany rose to minus 31.2 from minus 32.8 and a gauge of income expectations increased to minus 8 from minus 11.4. An index of consumers’ propensity to spend declined to 12.4 from 13.9.
Gfk said factors supporting consumer confidence include tentative signs of an economic recovery later this year, low inflation rates and rising pensions.
Only the other hand, concern about rising unemployment may damp sentiment in coming months, it said.
“The biggest risk to the consumer climate comes from the labour market.”
Bloomberg