Consumers were the main source of growth in Germany in the second quarter, data showed on Friday, as Europe's largest economy reaped the benefits of record-high employment, rising wages and low interest rates. Ciara Lee reports.
Record high employment, rising wages and low interest rates - it's all getting German shoppers in the mood. Consumers were the main source of growth in the second quarter, increasing by 0.6 percent. Private consumption rose by 0.8 percent It lends support to Chancellor Angela Merkel's campaign for re-election next month, which revolves around a promise to create jobs and cut taxes. Consumption has become the main engine for growth in Germany, replacing exports. The economy maybe powering ahead, but the IFO institute says it's not at risk of overheating And has more room for growth Its monthly survey showed a slight drop in business confidence in August. Although it fell, the dip was less than expected Having previously climbed to three record highs in a row. (SOUNDBITE) (English) Jasper Lawler, Senior Market Analyst, London Capital Group, saying: "There's been really strong momentum not just in Germany but in Europe in general for economic growth. And from that standpoint I think a bit of a lull is overdue and I think it makes sense in the context of that we do have the elections coming up in Germany and Germans tend to be very politically focussed, quite involved in the political process. And I think this is probably going to cause a little bit of worry and perhaps put off some investment decisions until after the election." Many may also be waiting to see how the car emissions scandal unfolds too. The mood among German investors fell for the third month running in August, a survey showed earlier in the week. The car industry is Germany's biggest exporter and provides around 800,000 jobs.