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German Consumer Confidence Is Heading for 12-Month High in March, GfK Says

German consumer confidence will increase to a 12-month high in March as falling unemployment and slowing inflation boost income expectations, GfK SE (GFK) said.

The Nuremberg-based market research company forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 6 from 5.9 this month. That would be the highest since March last year and match the median forecast in a Bloomberg News survey of 23 economists.

Unemployment in Europe’s largest economy is at a two-decade low of 6.7 percent, supporting consumer spending and helping to limit the impact of the sovereign debt crisis. Business confidence (GRIFPBUS) is at a seven-month high and Germany’s Bundesbank said on Feb. 20 that the outlook for the economy has “improved perceptibly,” even though risks remain.

While the impact of Europe’s turmoil may make for a “bumpy” recovery and drag on exports, the “incredibly favorable labor market in Germany has boosted expectations for higher wages,” GfK said in the statement. Furthermore, the inflation rate is expected to fall below 2 percent this year, it said.

GfK’s index of income expectations jumped to 41.3 in February, the highest since June, from 34.1 in January. A gauge of economic optimism fell to 5.9 from 7.5, while a measure of consumers’ willingness to spend slipped to 39.2 from 41.8.

The Bundesbank forecasts economic growth will slow to 0.6 percent this year from 3 percent in 2011 before accelerating to 1.8 percent in 2013.

Puma SE, Europe’s second-largest sporting-goods maker, on Feb. 15 forecast earnings will grow this year and next after posting a 2011 profit that beat analysts’ estimates.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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