Better-than-expected economic data has strengthened confidence among German consumers and businesses.
The consumer climate study for August published by the GfK Group, a market research company, says good news on economic development and the labour market lifted consumer spirits.
Expectations for the overall economy and personal income have also increased, suggesting that domestic demand will last for some time. (article continues below)
This is good news for those fearing Germany’s economy was too dependant on its exports for economic growth.
Dirk Mörsdorf, who researches consumer sentiment and behaviour for GfK, says buying trends are stabilising.
“Germans have become very sensitive to news from the economy and the labour market, especially after the recession,” he says.
Germany’s economy rose by 2.2% in the second quarter, the highest quarter-on-quarter rate recorded since reunification two decades ago.
The business climate index published by the Ifo Institute for Economic Research at the University of Munich, also points towards strengthened confidence among businesses.
Ralph Solveen, an economist at Commerzbank in Frankfurt, says businesses have upped investment following positive export figures. Domestic demand, which has long been weak, has also risen significantly.