German consumers are becoming more optimistic about the future, a report has said, boding well for a continuing recovery in Europe's largest economy.
According to research company GfK, its consumer sentiment index rose to 6.8 in June - the highest level since 2001.
Recently, strong export growth has pulled Germany out of a slowdown but consumer spending remained weak.
That may now change as the improving economic environment and job market prompts people to shop, analysts said.
Expert view
"With the end of the long winter, the mood among consumers has significantly brightened and it looks as if the trough of recent years has now been left behind," said Rolf Buerkl of GfK.
"Optimism that the German economy will develop positively has increased considerably, while personal income expectations have also improved," he added.
"Trust in a positive development of the German economy has increased considerably"
"Strengthening optimism among consumers is partly thanks to the positive picture painted of the current state of the economy by experts," he said.
GfK found that its index measuring consumers' willingness to spend surged to 49.8 in May, its highest level since records began in 1980.
Despite the positive implications of the report, analysts warned that a number of other short-term factors may have been stoking up consumers spending.
GfK's Mr Buerkl pointed out that plans to raise value added tax from next year may have prompted consumers to bring forward purchases, while there was a wage increase for workers in the metals and engineering industries.
Meanwhile, the football World Cup - due to start in Germany next month - may also be buoying sentiment.
Developments
Even though these effects may be short-lived, Germany has shaken off its label as Europe's problem economy and earlier this month leading analysts upped their prediction for growth in 2006 to 1.8% from their previous 1.2%.
The six economic institutes behind the forecast cited strong exports and higher consumer spending for the increase.
GfK said on Monday that: "Trust in a positive development of the German economy has increased considerably."
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