German Consumer Confidence to Reach 5-Year High in May, GfK Says

German consumer confidence will climb to the highest in more than 5 1/2 years in May as low unemployment and rising incomes boost household spending in Europe’s largest economy, GfK AG predicted.

The Nuremberg-based market research company forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will increase to 6.2 next month from a revised 6 in April. That would be the highest since October 2007. Economists expected the index to remain at its initial April reading of 5.9, according to the median of 28 estimates in a Bloomberg News survey.

The euro area is struggling to emerge from recession, delaying a recovery in Germany, which exports about 40 percent of its goods to partners in the 17-nation currency bloc. GfK said that with unemployment close to a two-decade low and workers winning bigger pay increases, the consumer mood is “extremely robust” even as economic headwinds strengthen.

“In view of the stable labor-market figures and rising incomes, consumers do not appear to consider their own economic situation to be at risk,” GfK said in an e-mailed statement. Still, consumers “are not quite so optimistic when it comes to economic developments in general.”

GfK’s measure of economic expectations fell to minus 1.5 in April from 0.6 in March. An index measuring consumers’ willingness to buy rose to 37.6 from 36.2, while a gauge of income expectations advanced to 30.8 from 29.4.

GfK said another factor behind the improvement in the consumer climate is the “low propensity to save” in Germany.