German consumer morale hits highest in more than six years - GfK

Wed Jan 29, 2014 2:00am EST

* Germans' income expectations at 13-year high

* Economic outlook improves for fifth month in a row

* Traditional savers are more willing to spend

By Annika Breidthardt

BERLIN, Jan 29 (Reuters) - German consumer morale unexpectedly rose to its highest level since August 2007 going into February, as shoppers became more upbeat about the outlook for Europe's largest economy and low interest rates encouraged them to spend rather than save.

GfK market research group said on Wednesday that its forward-looking consumer sentiment indicator, based on a survey of around 2,000 people, rose by 0.5 points to 8.2 points going into February.

That easily beat the consensus forecast in a Reuters poll for a reading of 7.6 points and compared with an upwardly revised 7.7 points for January.

"It was already evident at the start of the year that consumption would again be making a major contribution to overall economic growth in 2014," GfK analyst Rolf Buerkl said in a statement.

Private consumption in Germany grew by 0.9 percent in 2013, more than twice as fast as gross domestic product growth of 0.4 percent. Buerkl said in a recent Reuters interview that GfK expected private consumption to accelerate this year.

Germany, traditionally export-led, has come under pressure for relying too heavily on foreign trade at the expense of its euro zone peers, and for doing too little to boost domestic demand.

However, with interest rates low and the economic outlook improving for a fifth month in a row, Germans, traditionally known to save, have become historically less willing to do so now.

They were more likely to buy in December than at any time in the past seven years.

"Saving money has seemingly become still less appealing for consumers recently," Buerkl said.

"Ever more consumers are deciding to spend their money rather than pay it into the bank."

Income expectations rose to their highest in 13 years.

Other recent sentiment indicators, such as the Ifo business morale index, have also pointed to strong German growth but economists have said they tend to overshoot actual performance.

For a related table, click on (Reporting by Annika Breidthardt; Editing by Susan Fenton)

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