German business and consumer morale inches higher heading into June

Record ID: 101919

  • Title: German business and consumer morale inches higher heading into June
  • Date: 25th May 2016
  • Summary: NUREMBERG, GERMANY (MAY 24, 2016) (REUTERS) EXTERIOR OF GFK HEADQUARTERS SIGN READING GFK GFK EXPERT ROLF BUERKL WALKING PAST CAMERA CARD READING GFK BUERKL AT INTERVIEW CLOSE UP OF BUERKL AT INTERVIEW CLOSE UP OF HANDS (SOUNDBITE) (German) GFK EXPERT, ROLF BUERKL, SAYING: "The propensity to buy profits in the first line from the surrounding conditions, which continue for a while now. It's the good job market, the positive income development, we just had relevant trade agreements with relatively good and real wage rises and this all backed by a non-existing inflation. This provides for a good spending mood, which is supported by the fact that the saving mood is down due to the no-interest-rate-policy of the ECB. SURVEY (SOUNDBITE) (German) GFK EXPERT, ROLF BUERKL, SAYING: "For the coming month, we can probably say that the consumer climate will be stable and further develop on this good level. The consumer mood is in quiet waters at the moment, which is caused by the good domestic frame conditions. We don't want to embezzle that there might be some risks from outside. This is besides a possible Brexit, Britain's exit from the EU, possible weak periods of important trading partners of Germany such as China and the U.S.. This could of course dampen the spending mood." MUNICH, GERMANY (MAY 25, 2016) (REUTERS) VARIOUS OF ENTRANCE TO IFO ECONOMIC INSTITUTE IFO EXPERT KLAUS WOHLRABE WALKING OUT OF BUILDING AND TOWARDS CAMERA (SOUNDBITE) (German) IFO EXPERT, KLAUS WOHLRABE, SAYING: "The Ifo business index has substantially increased in May, as well as the current situation the expectations for the coming months have been revised upwards by the companies and this concerns every sector, construction, wholesaling and manufacturing are all significantly more satisfied with their current situation." WOHLRABE'S HAND'S WOHLRABE TALKING TO REPORTER WOHLRABE (SOUNDBITE) (German) IFO EXPERT, KLAUS WOHLRABE, SAYING: "The economic situation is very good at the moment. The very good figures from the gross domestic product (GDP) for the first quarter and the results of the current Ifo business index indicate a good upturn, which might even speeds up more. It could even be that the projections for this year have to be corrected upwards." VARIOUS OF IFO SURVEY
  • Embargoed: 9th June 2016 13:04
  • Keywords: consumer business economy Ifo GFK Germany
  • Location: NUREMBERG & MUNICH, GERMANY
  • City: NUREMBERG & MUNICH, GERMANY
  • Country: Germany
  • Topics: Economic Events
  • Reuters ID: LVA0014JB2LJH
  • Aspect Ratio: 16:9
  • Story Text: German consumer morale improved slightly heading into June as shoppers remained upbeat, a survey showed on Wednesday (May 25), signalling that private consumption continues to drive growth in Europe's largest economy.
    The spending power of Germans has been boosted by record-high employment, rising real wages and ultra-low borrowing costs.
    The GfK consumer sentiment indicator, based on a survey of around 2,000 Germans, rose to 9.8 heading into June from 9.7 a month earlier, reaching its highest level since September 2015 and beating a Reuters consensus forecast of economists.
    "The propensity to buy profits in the first line from the surrounding conditions, which continue for a while now. It's the good job market, the positive income development, we just had relevant trade agreements with relatively good and real wage rises and this all backed by a non-existing inflation," said Rolf Buerkl, a researcher for Nuremberg-based GfK. The survey found that expectations for the economy rose two points to 8.3.
    Consumers were less upbeat about their earnings for the next year, with the index for income expectations falling almost six points to 51.8. It was the lowest level since March this year.
    The drop in earnings expectations is a possible reflection of disappointment with wage rises sealed this month by German unions for more than six million employees that analysts said were not as generous as deals reached last year.
    Buerkl said despite the fall, the index remains in "excellent shape" with a reading above 50 points, adding that expectations that inflation will remain low this year mean the wage rises will leave employees with more money to spend.
    The willingness to buy improved by more than two points to 57.7, its highest level in 12 months.
    The German economy expanded by 1.7 percent in 2015, its strongest rate in four years, driven by robust private consumption and higher state spending on refugees. It is expected to grow by around the same amount this year.
    German business morale as well improved in May and even more than expected as companies were more upbeat about the current situation and managers' expectations also improved, a survey by the Munich-based Ifo economic institute showed on Wednesday (May 25).
    The Ifo business climate index, based on a monthly survey of some 7,000 firms, rose to 107.7 in May from 106.6 in April.
    "The Ifo business index has substantially increased in May, as well as the current situation the expectations for the coming months have been revised upwards by the companies and this concerns every sector, construction, wholesaling and manufacturing are all significantly more satisfied with their current situation," said Ifo expert Klaus Wohlrabe.
    "The economic situation is very good at the moment. The very good figures from the gross domestic product (GDP) for the first quarter and the results of the current Ifo business index indicate a good upturn, which might even speeds up more. It could even be that the projections for this year have to be corrected upwards," he added.
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