High unemployment has held back German economic growth

The forward-looking GfK consumer sentiment indicator, based on a survey of 2,000 Germans, rose to 8.6 for August, up from a revised 8.0 in July.

The reading is the highest since the November 2001 figure of 9.6.

But it is largely based on locking-in purchases ahead of a 3 percentage point VAT rise from January 2007.

World Cup visitors

"While consumers' plans to buy more big ticket items in the near future are racing from record to record, more and more people lack confidence in overall economic developments," GfK said in a statement.

Economic growth has been held back by sluggish private consumption - which accounts for 60% of gross domestic product - and by high unemployment.

The German government had hoped the economy, Europe's largest, was finally emerging from years of stagnation.

There was a temporary retail boost during the football World Cup in the months of June and July, with overseas visitors flocking to Germany and spending heavily.

And, increasingly, retailers and economists have been more positive that the country's tepid retail climate could heat up as part of a broader-based recovery.

However, the three criteria that make of the GfK confidence number - willingness to buy, expectations for personal income, and the economic cycle - still painted an unclear picture of German consumers, the research group said.