German consumer sentiment is set to improve strongly in February as shoppers' income expectations surge and their readiness to spend rises to a three-year high, the GfK research group said today.
GfK's forward-looking consumer sentiment indicator for February, based on a survey of 2,000 Germans, rose to 4.1 from an upwardly revised 3.1 in January.
It was the fifth consecutive monthly improvement in the indicator and a much stronger reading than economists' consensus forecast for a moderate rise to 3.0.
"It looks as though the consumer mood in Germany has taken a positive turn," GfK economist Mr Rolf Buerkl said in a statement.
"As a result, domestic demand could again play a more important role in positive economic developments."
The government has been trumpeting an upturn in domestic demand this year, even after cutting its economic growth forecast to 1.6 from 1.7 per cent as high oil prices and a strong euro look set to weigh on exports.
Germany, which relies on private consumption for about 60 per cent of its economic growth, has had to rely on foreigners' appetite for its goods in recent years because its own citizens have been unwilling to open their wallets.
But the government hopes its controversial labour market reforms will cut unemployment and, together with tax cuts which took effect in January, boost confidence and stimulate demand.