German consumer sentiment has risen again in September in anticipation of higher incomes and faster growth in the eurozone's largest economy, according to a study published Thursday by the GfK market research institute.
GfK predicted that its consumer sentiment barometer for the upcoming month of October would consequently inch up 0.1 points to 10.6 points. The findings were based on a survey of around 2,000 respondents which has been conducted by the Nuremberg-based institute since 1980.
"Consumer sentiment in Germany has showcased a largely positive development in September," a GfK statement read. Expectations of economic growth rose by 4.9 points to 27.1 points, reversing a downward trend recorded during the first six months of 2018.
"It is still the case that the trade conflict between the European Union (EU) and United States, as well as the risk of a hard Brexit is not weighing too significantly on economic optimism" among Germans, the study noted. Instead, consumers remained convinced that Germany is on a solid path of growth in spite of a recent weakening of domestic economic momentum.
According to GfK, the upbeat mood of consumers was largely a product of the booming German labor market and encouraging official data on gross domestic product (GDP) growth during the second quarter (Q2). A resulting expectation of higher earnings had outweighed a slight decline in the inclination of respondents to spend their existing savings on private consumer goods. The GfK's specific wage expectation indicator soared by 5.3 points to a total of 57.9 points, marking the highest monthly reading since August 2017.
"The still excellent labor market continues to offer good framework conditions for a significant rise in the incomes of employees. Public pensions, whose development is tied to wages and salaries, will follow suit," GfK explained.
The institute emphasized that even an uptick in inflation during past months had failed to erode German spending power as real wage growth remained in positive territory.
A separate study published earlier by the Federal Statistical Office found that wages (plus 2.5 percent) grew ahead of consumer prices (plus 2 percent) in the second quarter (Q2) of the year, although the latter figure marked the fastest pace of inflation in six years.
In light of these findings, GfK cautioned on Thursday that domestic private consumption in Germany was making an increasingly important contribution to overall growth in the country's traditionally export-oriented economy.
"Possible obstacles to exports through higher tariffs or other barriers will, above all, hit the exporting nation Germany. In this case it is all the more important that domestic growth constitutes a reliable and stable anchor," the institute said.
