Germany's closely watched consumption climate index has posted a surprise gain based on public perceptions that the economy remains in robust shape. This, however, could prove to be an illusion.
Germany's forward-looking GfK consumer confidence index unexpectedly rose to 6.3 points for November, from a revised reading of 6.1 percent for this month, the Nuremberg-based GfK market research group said Friday.
"People's fears of recession that were prevalent in summer have not increased," GfK said in its monthly report, gauging opinions of about 2,000 German households.
The index for November suggested that the consumption climate had stabilized, GfK added, as it posted the second monthly rise in a row.
Furthermore, the key indicator showed that Germans' income expectations, as well as their economic expectations and their willingness to spend money were up for the coming month.
The gain has surprised economists who had predicted the GfK index to remain stable at October's original 5.9-point reading at best.
Consumer confidence remains high
HSBC Trinkhaus analyst Thomas Amend told the Reuters news agency that the rise mustn't be over interpreted as other economic indicators clearly pointed toward a cooling of the German economy.
Expecting the economy to shrink in the fourth quarter of 2012 on the back of lower exports and rising unemployment, Amend said the mood among German consumers was bound to fall over the next month, too.
Although the German economy has avoided slipping back into a recession this year, confidence among businesses to continue growing robustly has been dropping for the past six months.
Last week, the German government cut its original growth forecast for 2013 from 1.6 percent to just about 1 percent.