German consumer sentiment rises in August, consumption to remain key growth driver through 2018

German consumers are increasingly optimistic about the economy. Many economic surveys from the euro area released last week surpassed expectations to imply that sentiments continue to be elevated and growth momentum continues to be strong. After this, the German GfK consumer sentiment survey kept the flow of upbeat news.

In contrast to the consensus expectation of no change, the headline sentient index rose higher to 10.9 from 10.8 to show the highest level since 2001. Underpinned by continued highly favourable conditions in the labor market, the barometer of consumers’ expectations of future income growth rose for the fifth straight month to a post-reunification high. This trend was seen in consumers’ willingness to purchase, for which the respective index reversed the fall seen in July to rise to its second-best level in over two years, and close to the series high.

“With German consumers feeling so confident, there seems every reason to expect consumption - which in Q2 rose 0.8 percent Q/Q, the most in almost six years - to remain a key engine of economic growth into 2018”, said Daiwa Capital Markets Research.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish at 110.043, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -23.7985. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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