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German Consumer Confidence to Hold Steady in September

Aug. 28 (Bloomberg) -- German consumer confidence will hold steady in September as rising household incomes offset concerns that the economy will enter recession, GfK SE said.

The market research company in Nuremberg forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will remain at 5.9 next month. The last time the index was higher was when it reached 6 in March last year. Economist predicted a decline to 5.8, according to the median of 25 estimates in a Bloomberg News survey.

Unemployment at a two-decade low of 6.8 percent, higher wages and a waning desire to save are boosting household purchasing power even as Europe’s sovereign debt crisis curbs economic growth. Business confidence fell for a fourth straight month in August, the Ifo institute said yesterday.

“German consumers’ fears of a noticeable weakening of the economy continued to rise in August,” GfK said in a statement. Still, “a stable job market and the comparatively high wage agreements compared to previous years are proving to be positive factors encouraging major purchases,” and “the inclination to save is also currently regressive,” it said.

While a gauge of economic expectations dropped to minus 18.9 in August from minus 5.6 in July, an index measuring consumers’ willingness to spend eased just 2.7 points to 33.1, GfK said. A measure of income expectations declined to 31.6 from 36.3.

Metro AG, Germany’s biggest retailer, on July 31 posted second-quarter profit that beat analysts’ estimates as sales rose in its home market and at its Cash & Carry and Media-Saturn units.

Consumer spending rose 0.4 percent in the second quarter from the first, a breakdown of gross domestic product showed Aug. 23. That helped the economy grow 0.3 percent in the quarter.

“Private consumption continues to be an important prop for Germany’s economy,” GfK said. “Private consumption is likely to rise by around 1 percent in real terms this year.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

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

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