German consumer sentiment unexpectedly climbed heading into February, said GfK market research group on Wednesday. 

This indicates that an initial agreement reached between the United States and China in the ongoing trade war has put German buyers at ease.

The GfK consumer indicator, based on a survey of 2,000 participants, increased to 9.9 points in January, up from a revised 9.7 the previous month and against analyst expectations of 9.6 in a Reuters poll.

Rolf Buerkl, researcher at GfK said that a Phase 1 trade deal in the U.S.-Sino trade war offered some comfort in the eurozone’s largest economy, which relies heavily on exports for economic growth.

Earlier in January, Washington and Beijing reached a resolution after 18 months of protracted trade disputes, which had thwarted global economic growth and drove up business uncertainty. 

GfK’s sub-indicator of business forecasts edged slightly higher, but remained on the negative side at -3.7 points.

Solid employment, an increased tendency to buy and hopeful income expectations bolstered German consumer sentiment. 

Germans are still opting for spending over saving, as the European Central Bank’s low interest rate policy has been prompting some central banks to levy punitive interest rates on private investors, GfK noted.

The GfK forecast for 2020 overall showed a 1% real increase in private consumer spending in Germany, 

“The positive start of the consumer climate in 2020 confirms our assessment that private consumption will continue to be an important pillar of the German economy this year,” Buerkl said.

The GfK survey was conducted between January 8 and January 20, 2020.

 

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