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September 28, 2010    

German consumer confidence reaches three-year high

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by Kay Murchie
German consumer confidence reaches three-year high

Consumer confidence in Germany, which is the euro zone’s largest economy, has surged, according to the GfK research group.

GfK said its latest German consumer climate indicator forecasted a value of 4.9 in October, following a revised reading of 4.3 in September.

The forward looking indicator, which questioned around 2,000 people, was ahead of economists’ forecasts of 4.2.

Germany was one of the first economies to emerge from recession in the second quarter of 2009 and the Government is expected to raise its official growth forecast of 1.4% for 2010 next month.

Meanwhile, falling unemployment was one of the factors attributed to the rise in confidence.

Germany’s job market is much stronger than in many other countries and many believe it is the result of the “Kurzarbeit” scheme, introduced by the German Government, designed to prevent mass redundancies.

The country’s jobless rate is currently 7.6% and the number of unemployed is expected to fall below the three million mark by the end of the year.

Meanwhile, commenting on the results of the survey, GfK said: “Consumers currently expect the economic upturn to continue in the coming months.

“In this context, the public clearly sees a realistic prospect of income growth, which is itself helping to stimulate the propensity to buy.”

ING senior economist Carsten Brzeski added: “Over the past years, the GfK index has outperformed all other consumer confidence indicators as best predictor of private consumption.

“Today’s reading confirms our view of a further broadening of the German recovery,” added Mr Brzeski.

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