German real earnings increase strongly in 2015

Thanks to favorable economic situation and weak inflation, German real earnings increased strongly in 2015, cementing private consumption which played as the main driving force of German economic growth, official data showed on Thursday.

Excluding effects of price increases, Germans in 2015 earned 2.5 percent more than in the previous year, said German Federal Statistics Office.

It was the largest increase since 2008, it added.

Weak inflation eroded little purchasing power of German households. In 2015, prices for goods and services went up by only 0.3 percent. Meanwhile, nominal earnings rose by 2.8 percent, slightly faster than the average level in the past five years.

Favorable economic situation was behind the increases. In 2015, nearly 43 million people living in Germany had jobs. The country's jobless rate was among the lowest in the European Union.

The European Central Bank's low interests policy and falling energy prices due to international oil market slump further propelled Germans to loose purse strings, especially for big ticket purchases.

Last year, German retailers logged the strongest sales growth over 21 years. Coming into the new year, German consumers' confidence remained at a high level despite risks including terror attacks and the refugee crisis.

"Currently, consumption boosts the German economy noticeably," said German Institute for Economic Research in its January monthly report. It expected the economy to expand by 0.4 percent at the first quarter of 2015.

The German government looked to private consumption to continue support the economy this year against the backdrop of lagged global recovery and sluggish domestic investment.

In its spring economic report, the government forecast that the consumption would increase by 1.9 percent in 2016, driving an economic growth of 1.7 percent, the same as in last year. Endit