Germany's consumer sentiment as measured by GfK indicator rises to 7.4 going into December, up from upwardly revised 7.1 in previous month and the highest reading since August 2007

BERLIN , November 27, 2013 () – German consumer sentiment rose to its highest in six years going into December, supporting the view that strong consumption will make up for weaker exports and help Europe's largest economy post moderate growth this year.

The GfK market research group said on Wednesday its forward-looking consumer sentiment indicator, based on a survey of around 2,000 people, rose to 7.4 going into December from an upwardly revised 7.1 the previous month.

It was the highest reading since August 2007 and beat the median in a Reuters poll of 26 economists for 7.1.

"The consumer climate is posting a little year-end final spurt," said GfK's Rolf Buerkl in a statement. "The prospects of a faster revival of the German economy as well as the (European Central Bank's) interest rate cut are giving an extra impetus to consumer sentiment at the end of the year."

Traditionally big savers, the Germans have become more willing to spend as the jobs market remains stable and low interest rates make saving less attractive.

That bodes well for Christmas trading, said GfK retail expert Wolfgang Adlwarth, predicting Germans would spend 288 euros ($390) each on Christmas presents this year, almost 1 percent more than last year.

Their propensity to spend, which has already risen, increased again in November to a seven-year high, helped by another interest rate cut from the ECB, GfK said. The related index climbed to 45.7 from 44.4 in October. A sub-index tracking consumers' income expectations also jumped.

The survey chimed with data last week showing that companies' expectations were at their highest since spring 2011 and were the most upbeat about their current situation since June 2012. More than half of German blue-chip companies have reported better-than-expected results in recent weeks.

GfK reiterated its forecast that private consumption would rise by 1 percent this year, double the near 0.5 percent overall economic growth it expects. It said spending would rise next year too, but declined to give any figures.

The consumer climate could be boosted further by news on Wednesday that Chancellor Angela Merkel's conservatives and the centre-left Social Democrats (SPD) have a clinched a coalition deal that rules out tax hikes.

"The fact that it now won't come to tax increases is a positive sign for consumer morale, I would say," GfK CEO Matthias Hartmann told journalists in Frankfurt.

Foreign trade was actually a drag on gross domestic product (GDP) growth in the third quarter and data showed last week that the economy was being propped up by domestic demand.

Still, with exports traditionally the backbone of the German economy and the country posting a record current account surplus, the European Commission is investigating whether Europe's bulwark economy is relying too much on exports.

(Reporting by Annika Breidthardt; Additional reporting by Victoria Bryan in Frankfurt; Editing by Hugh Lawson/Catherine Evans)

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.