STOCK MARKET WATCH - Thursday, 26 January 2012

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22. German Consumer Morale To Improve Despite Eurozone Recession Fears: GfK

Last edited Thu Jan 26, 2012, 06:20 AM - Edit history (1)

BERLIN (dpa-AFX) - Confidence among German consumers is set to increase in February, supported by rising economic optimism and high income expectations despite growing concerns about a possible recession in euro area in the first quarter of 2012, survey results from market research group GfK revealed Thursday. The forward-looking consumer confidence index is seen at 5.9 in February, higher than the revised 5.7 in January. Economists had forecast the score to stay unchanged at the initial January reading of 5.6. 'This development would seem to suggest that private consumption will be fulfilling its designated role as an important mainstay of economic growth in 2012,' the GfK said.

Especially given the sluggish global economy and growing trend towards recession in Europe, consumption will have the role of stabilizing the economy in Germany and preventing a slide into recession, the research group said.

The economic expectations index for January rose by 8.4 points to 7.5, marking the second consecutive rise. The income expectations indicator improved marginally by 0.1 point to 34.1. Prior to this, the indicator had fallen successively for five months.

Income expectations received a continued boost from the extremely positive situation in the German labor market. The majority of forecasts currently assume that the employment rate will increase further this year, although rather less dynamically than in 2011, the group said. The indicator reflecting willingness to buy durables gained 14.4 points to 41.8, reversing prior fall of 12.9 points. A higher value than the January reading was last recorded over five years ago, in December 2006. According to the group, there are several reasons for this remarkably strong desire to buy among Germans, including the positive development in employment, falling rates of inflation and the indirect impact that the current banking and debt crisis is having on retail trade. 'Given the lack of trust Germans have in financial markets and historically low interest rates, consumers seem to be more inclined to make high-value purchases rather than saving their money,' GfK said...

/... http://www.finanznachrichten.de/nachrichten-2012-01/22536896-german-consumer-morale-to-improve-despite-eurozone-recession-fears-gfk-020.htm