Monday April 27, 08:34 AM
German consumer confidence resists recession: GfK
FRANKFURT, (AFP) - German consumer confidence is resisting a deep recession in Europe's biggest economy, the latest survey by the GfK research institute showed.
A widely-tracked index compiled by GfK was stable at 2.5 points for May, the Nuremberg-based think tank said, though it warned that rising unemployment could hinder a strong rebound.
"The consumer climate is proving to be surprisingly resilient in the face of all the gloomy predictions" for a sharp drop in German output this year, a statement said.
GfK's survey of around 2,000 people is the leading barometer of household confidence in Germany, which is suffering its worst recession in six decades.
The survey measures income expectations as well as consumers' outlook on the economy in general and their propensity to make major purchases.
Household confidence has held up owing to a very successful government car scrapping bonus, lower energy prices and higher pension payments, GfK found.
Hopes for an economic turnaround towards the end of the year, as demonstrated by an increase in the Ifo business climate index last week, have also helped keep consumers' moods from sinking, the statement said.
It added however that downbeat growth reports "which warn that the German economy will shrink by six percent in 2009, are likely to severely test consumer sentiment."
A sub-index which measures consumers' propensity to make large purchases dropped slightly, but remained well above its level of a year ago, as Germany's car scrapping scheme "is keeping consumer sentiment high," GfK said.
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