European car sales rise 6.3 percent in January, but German investor morale slips in February on concerns about the global economy and uncertainty over falling oil prices. Grace Pascoe reports.
Consumer confidence seems to be revving along nicely in Europe. Sales of cars rose 6.3 percent in January With over 1 million sales in the month. And lower energy costs are helping, thinks Panmure Gordon's Simon French. (SOUNDBITE) (English) PANMURE GORDON, CHIEF ECONOMIST, SIMON FRENCH, SAYING: "That effective tax cut felt by the consumer has, in most geographies, including in the European Union but of course in the UK and in the U.S. as well, going out and spending that windfall as most consumers start to realise that their energy prices, the cost of filling up their cars is going to be lower for longer. And also lower interest rates for longer. That gives more confidence not just to buy small discretionary purchases but move up the value chain." In Germany though, investor morale is down. To a sixteen month low. The ZEW's index fell to 1 point for February, from 10.2 in January. Joe Rundle of ETX Capital thinks that could still upset the consumer apple cart. (SOUNDBITE) (English) ETX CAPITAL, HEAD OF TRADING, JOE RUNDLE, SAYING: "I think we will see some effect of it and if it continues at this volatility I expect it to have a serious knock on effect to consumer confidence but that probably won't happen for a couple of months." Analysts say the January car sales are one of the highest readings in five years. But could slow as the year progresses. As for business sentiment: along with the current concerns over global markets, investors say there's now more chance that the German economy will slow this year.