German Consumer Spending Hits Five-Year High

By Ilya Rzhevskiy, Epoch Times
November 23, 2010 Updated: October 1, 2015

GERMANS SPENDING AGAIN: A few shoppers brave the rain to attend the opening day of the Christmas market at Gendarmenmarkt in Berlin, Nov. 22, as the Christmas shopping season starts. German consumer spending growth hit a 5-year-high last month and retailers are very optimistic about the holiday season. (Odd Andersen/AFP/Getty Images)
GERMANS SPENDING AGAIN: A few shoppers brave the rain to attend the opening day of the Christmas market at Gendarmenmarkt in Berlin, Nov. 22, as the Christmas shopping season starts. German consumer spending growth hit a 5-year-high last month and retailers are very optimistic about the holiday season. (Odd Andersen/AFP/Getty Images)
MUNICH—Germany became the first European Union economy to recover from the economic crisis and last month the nation reported a five-year-high consumer spending growth.

Its total economy is set to grow 3.7 percent this year annualized, and especially forecasting to have very strong holiday shopping months of November and December, where consumer spending will reach 77 billion euros (US$106 billion), an increase of 2.5 percent compared to the same period last year.

“Germany is an island of bliss within a pessimistic Europe,” said Peter Thormann, head of Deloitte & Touche’s consumer business in Germany, in a statement. “I haven’t seen this for the last 10 years at least,” he added.

The Christmas holiday season is flush with German traditional outdoor markets present in almost every city—small to big—selling souvenirs, sweets, hot wine, and cakes.

“We are sure that the Christmas season this year will be as good as last year, and when everything goes as expected, it will be even better,“ said Hans Strohmaier, CEO of Sweet Global Network, an international confectionery association formed by 250 sweets-producing companies.

According to HDE, the Germany Retail Federation with 410,000 corporate member companies, holiday sales account for 20 percent of the total year’s sales. Especially profitable during the holiday season are retailers of books, jewelry, toys, and consumer electronics, which generate up to 30 percent of total yearly revenues for retail stores.

German online businesses expect a robust 8 percent revenue increase to 6 billion euros (US$8.2 billion) during the 2010 holiday shopping season. “Santa Claus is also coming on the Internet,” said Josef Sanktjohanser, the president of HDE, in a statement.

This extremely positive economic growth and high consumer spending is accompanied by a relatively low jobless rate dropping below 3 million people in October, which is equivalent to 7 percent—the lowest in 18 years.

In addition, the German electronics giant Siemens AG has announced that it would spend 310 million euros (US$410 million) on one-time special bonuses for its employees in addition to increasing everyone’s salary by 2.7 percent. Automaker Porsche AG is also following the trend giving out 2,100 euro (US$2,870) bonuses to all of its employees as a Christmas present.

The retail industry is one of the biggest employers in Germany, supporting around 3 million workers.

“Retailers have high expectations for the Christmas season. … At the moment we assume that retail in 2011 will not be markedly over 2010 levels,” said Sanktjohanser.

Weather in December also will play an important role in consumer spending. Retailers have traditionally enjoyed higher sales if inclement weather is avoided.

“What works the best is a beautiful, sunny and frosty day with a bit of snowfall from time to time,” said Nils Busch-Petersen, the CEO of Berlin-Brandenburg Retail Association.

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