(Adds economist comment)
By Dave Graham
BERLIN, April 27 (Reuters) - German consumer sentiment should hold firm going into May, helping to buttress Europe's largest economy from the full force of a sharp downturn in industry, a leading survey showed on Monday.
The GfK market research group said its forward-looking consumer sentiment index, based on a survey of 2,000 Germans, was unchanged at 2.5 in May after being revised up from an originally reported 2.4 in April.
The latest figure beat the mid-range forecast of a poll of
analysts last week for a reading of 2.3
"Looking ahead, we still expect private consumption to be the bright spot for the German economy and to cushion the collapse of German industry," said Carsten Brzeski, an economist at ING Financial Markets.
"However, the rise in unemployment and, even more importantly, record-high unemployment expectations will make this a very thin cushion," he added.
Consumer sentiment should hold steady going into May because shoppers are less downbeat about the economy, although they are more cautious about spending, GfK said.
"Given that recession has spread across the whole of the economy, the consumer climate is extremely robust," GfK said in a statement. "Consumers are still defying the negative reports about falls in industrial output and orders."
Germany is in the midst of its severest recession since World War Two and leading economic think tanks last week forecast the economy would contract by 6.0 percent this year.
This would be an annual decline in gross domestic product (GDP) more than six times worse than in any year since the war.
However, forward-looking indicators such as the Ifo institute's gauge of business confidence and the ZEW think tank's measure of analyst sentiment last week suggested the recession in Europe's largest economy could be bottoming out.
Markets took heart from a series of better-than-expected banking results from the United States, where a fall in house prices helped sparked the financial crisis in 2007.
The GfK gauge of German consumers' economic expectations rose slightly in April to -31.2 from -32.8 in March, the latest survey data showed. A separate measure of income expectations advanced to -8.0 in April from -11.4 the previous month.
By contrast, an index which assesses their willingness to buy fell to 12.4 from 13.9 in March.
The recession has increasingly left its mark on the German labour market, which saw its biggest rise in unemployment in more than four years last month. Further jumps in unemployment are likely to depress consumer sentiment, GfK said.
"If measures like shortened hours designed to reduce job losses are exhausted before there is any economic turnaround, there are going to be further job cuts which will hit the labour market and hence consumer sentiment hard," GfK said. (Reporting by Dave Graham; Editing by Toby Chopra)