German consumer sentiment is poised to edge up to its most positive level in almost five years in September, but confidence will likely diminish ahead of a hike in sales tax in January, a survey showed today.
The GfK market research group said its forward-looking consumer sentiment indicator, based on a monthly survey of 2,000 Germans, is set to rise to 8.6 in September, the highest since November 2001's 9.6, from a downwardly-revised 8.5 in August.
September's high was supported by another strong reading in the GfK's willingness to buy component. SEB economist Klaus Schruefer in Frankfurt said the slight rise reflected consumers' desire to bring forward purchases to beat a 3 percentage point increase in value added tax in 2007.
"After all, no other VAT increase in history has been so well flagged in advance," said Mr Schruefer. "It's also clear that consumers are gaining confidence from the new jobs the current upswing is creating."
Euro zone government bonds extended the previous session's losses after the GfK data. Optimism about the economic outlook deteriorated for the third month in succession and income expectations stagnated at a low level.
GfK economist Rolf Buerkl said positive sentiment among German consumers appeared to have peaked. "The key indicators of consumer mood suggest that sentiment will scarely improve this year," Buerkl said.
"To be sure, the propensity to spend remains high, but positive sentiment about the economic outlook is increasingly diminishing."