German consumer sentiment continues to rise

Consumer sentiment in Germany, the biggest economy in the eurozone, is continuing on its upward trend, buoyed by favourable developments on the labour market and a positive overall economic environment, a new poll showed on Monday.
The consumer sentiment index calculated each month by market research group GfK was forecast to rise to 8.4 points in July from 7.4 points in June, the think-tank said in a statement.
"Germans are still in a shopping mood," GfK said. "Rapid successes on the labour market and a globally favourable economic climate ensure that the positive sentiment is continuing into the summer." For its monthly survey, GfK quizzes around 2,000 consumers on their views on the economic outlook, income expectations and their propensity to buy.
The responses are then used to calculate an overall consumer climate index and based on the current month's reading, the GfK also provides a forecast as to where it expects the index to stand the following month.
The survey found that consumers' propensity to buy rose by 13.2 points to plus 9.1 points in June, with the fourth consecutive monthly rise bringing the sub-index back into positive territory. "After the weak phase in propensity to buy caused by the VAT increase at the beginning of the year, the indicator has now risen for the fourth month in a row," GfK found. "The dent caused by the VAT hike is firmly behind us." The government raised VAT by three full percentage points to 19 percent with effect from January 1, in a move which critics said would stifle consumer spending. The data so far indicate that there was indeed a dent in private consumption but that it proved only transitory.
Households are also optimistic with regard to their future income, even if that sub-index slipped by 4.9 points to plus 28.7 points in June in a corrective move to the strong gains recorded in the five preceding months. The economic expectations sub-index also slipped slightly from the record high it topped last month eassing by 0.5 point to 69.0 points, GfK calculated.