| BERLIN, Sept 25
BERLIN, Sept 25 Consumer morale in Germany held
steady heading into October as low interest rates encouraged
people to keep spending rather than put money in the bank for
meagre returns, a survey by the GfK market research group showed
The forward-looking consumer sentiment indicator, based on a
survey of around 2,000 Germans, stood at 5.9 in October,
unchanged from September and matching the consensus forecast in
a Reuters poll of 24 economists.
"Consumers are still tending to invest their money in higher
value purchases, such as real estate, rather than saving it in
the bank. This is verified by the distinctly low propensity to
save," GfK said in a statement.
October's reading supports expectations that domestic demand
will prop up the traditionally export-driven German economy as
demand in the euro zone, where many states are implementing
tough austerity measures, slackens and the broader global
economic environment weakens.
GfK reiterated its prediction that private consumption,
which makes up around 60 percent of German gross domestic
product (GDP), would increase by about 1 percent in real terms
"Consumption therefore continues to truly fulfil its role as
a reliable supporting pillar for the economy. Taking into
consideration the crisis, 2012 is set to be a pleasing
consumption year," GfK said in a statement.
The relatively stable labour market and good wage deals
should buoy consumers' willingness to buy goods, GfK said.
Germany's unemployment rate stands at just 6.8 percent,
close to its lowest level since reunification more than two
decades ago, and workers in the chemical and engineering sectors
are taking home more pay after successful wage negotiations.
But Germans have become more pessimistic about their future
financial prospects after joblessness rose for a fifth month
running in August and annual inflation accelerated to 2.1
percent on the back of higher fuel and heating oil prices.
"Consumers therefore fear their purchasing power will
suffer," GfK said.
Retail sales fell in July as consumers feeling the squeeze
from higher fuel prices cut back on other items. The euro zone
crisis has also taken its toll on retailers in recent months,
with Puma saying it would reduce sponsorships and the
number of products it sells and department store chain Karstadt
planning job cuts.
The German economy expanded 0.5 percent in the first three
months of the year but slowed to a mere 0.3 percent in the
second quarter. Many economists predict a contraction for the
third and possibly fourth quarters of the year.
Tuesday's survey showed consumers did not become more
worried in September about a recession, however, as their
economic expectations rose slightly, though they remained at a
low level overall.
In a report published on Monday the Bundesbank central bank
said the economy should continue its overall upward trend at the
start of the third quarter but it added that signs of a slowdown
Recent data from Europe's economic powerhouse has been mixed
- while business sentiment has fallen and the private sector has
contracted, analyst and investor sentiment has picked up and
exports, imports, orders and industry output have all risen.
(Editing by Hugh Lawson)