BERLIN, Sept 29 - German consumer sentiment is set to improve for a sixth month in October although growing concern about the economy means shoppers remain reluctant to spend, data compiled by market research firm GfK showed on Monday. GfK said its forward looking consumer sentiment indicator for October rose to 5.3 from an upwardly revised 5.0 in September to reach its highest level since November 2002. "The consumer climate will probably not improve much as long as there is no real positive news on the jobs market that would point to better times," GfK said in a statement on the results of its monthly poll of around 2,000 consumers.
Germany's economy is in a technical recession and unemployment at 4.3 million in August is expected to climb to record levels early next year. Government efforts to reform the labour market have had only a limited impact so far. GfK found consumers to be more optimistic about their income expectations than at any time since September 2002, attributing the rise to government plans to bring forward 15.6 billion euros of tax cuts to 2004 from 2005. In contrast, consumers' assessment of the economy slipped, and their willingness to buy remained weak. Evidence of recovery has so far been scant, although German retailers are increasingly optimistic this will soon change, according to a poll by the Ifo economic institute last week. Swedish retailer Hennes & Mauritz AB last week blamed weak demand in Germany, its main market, for slower sales growth in the third quarter. German upmarket fashion house Escada AG said on Friday it would lay off 850 of its 4,500 workers, including 300 in Germany, and close 35 outlets in an effort to stem losses. Official data due this week will provide a first picture of consumer spending in August, when retailers complained that record temperatures kept shoppers out of town centres. The Federal Statistics Office is due to report wholesale sales figures on Tuesday and retail sales data on Wednesday, while the HDE retail federation will present its latest outlook. Joerg Kraemer, chief economist at Invesco Asset Management in Germany, said in a note to clients on Friday he expected retail sales rose 0.7 percent month on month in August after they fell 1.6 percent in July. But his optimism was muted. "On trend, retail sales should continue to stagnate," he wrote.//