German consumer confidence rose to 5.6 in December (preliminary) amid a rise in the propensity to spend
 
The German Gfk consumer confidence index (preliminary) for December rose to 5.6, up from 5.4 reported for November (revised up from 5.3 reported earlier) - reaching the highest level since June. A (small) decline in the index had been widely expected.

Looking at the breakdown, price expectations fell to -4.1 in November from -1.7 in October, while business cycle expectations deteriorated to -7.2 from -6.2 in the preceding month. Also, income expectations fell to 31.1 from 36.5 in the October, while the propensity to spend was up 40.3 from 31.2 earlier.

Finally, the propensity to spend fell to -13.3 from -10.3 last month. That said, the rise in the (preliminary) index was attributable to a rising propensity to spend - and this may actually reflect concerns about the consequences of the crisis, causing consumers to bring forward purchases. "A lower savings quota, rising employment and salaries are giving consumer sentiment a boost," GfK said in a press statement.

Indeed, in particular the ongoing favourable labour market situation in Germany (with employment actually hovering at a record level since the early 1990s) may well have supported consumer sentiment. The latest indication confirms our estimate that private consumption will make a positive contribution to real GDP expansion this year.  
 

source: BarCap