September 27, 2018 / 6:02 AM / 6 months ago

German consumer mood improves going into October- GfK

BERLIN, Sept 27 (Reuters) - The mood among German shoppers improved slightly heading into October as shoppers’ incomes and economic expectations both rose, a survey showed on Thursday, suggesting that consumers will keep feeding the growth of Europe’s largest economy.

Household spending has become the main source of expansion in Europe’s biggest economy in recent years, backed by record-high employment, increased job security, above-inflation pay hikes and low borrowing costs.

The Nuremberg-based GfK institute said its consumer sentiment indicator, based on a survey of around 2,000 Germans, rose to 10.6 points going into October from 10.5 points the previous month. That compared with a Reuters consensus forecast for the index to stay unchanged at 10.5 points.

“Despite political turbulence, economic and income optimism are on the up,” Rolf Buerkl, a researcher for GfK, said in a statement. “Private-sector spending will thus prove itself to be an important pillar of Germany’s economic growth.”

GfK’s subindex measuring propensity to buy fell 2.3 points to 52.9. The income expectations index rose 5.3 points on the month to 57.9, the highest in a year, propelled by a stable job market and strong demand for workers.

The sub-index measuring economic expectations rose 4.9 points to 27.1.

“Neither the trade dispute between the EU and the United States nor the threat of a hard Brexit seems to be restricting economic optimism long-term,” Buerkl said.

The GfK survey was conducted from Aug. 31 to Sept. 14, as concern mounted in Germany about progress of talks over a deal on Britain’s departure from the European Union.

OCT 18 SEPT 18 OCT 17 Consumer climate 10.6 10.5 10.8 Consumer climate components:

SEPT 18 AUG 18 SEPT 17 - willingness to buy 52.9 55.2 57.0 - income expectations 57.9 52.6 52.7 - business cycle 27.1 22.2 33.4 expectations

NOTE - The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop in comparison with the same period a year ago.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent in private consumption.

The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.

Editing by Larry King

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