German consumers continue to hold rising expectations for the economy and their incomes, buoyed by stable employment and low interest rates, results from GfK's consumer climate survey showed.
GfK forecasts the consumer climate to rise to 10.8 in January 2018, up 0.1 point from the previous month.
Consumers' economic outlook climbed to 45.2, its highest level since July 2014, up 0.9 point from last month. The economic outlook indicator, which has been buoyed by a robust German job market, was also nearly 28 points higher compared with the year-ago period, according to GfK.
The income expectations indicator rose to 54.3, up 6.4 points from the past month. A jump in worker salaries, a high job vacancy rate and moderate inflation that boosts purchasing power contributed to the turnaround in income expectations, which has dipped in the past three surveys.
German consumers' propensity to buy was "overall stable" as it fell to 57.1, down 1.4 points from the last survey, but still up by 9 points from the year-ago period. Stable employment conditions and a low interest rate environment have supported the positive buying mood and lifted retail sales so far this year, according to GfK.
While failed attempts to form a coalition government in November did not dampen consumer sentiment, GfK said risks remain from the slow-moving Brexit negotiations, possible U.S. protectionist trade policy, and tensions with North Korea.