German retailers upgraded Tuesday their forecast for 2014, saying the robust labour market is providing consumers with festive cheer ahead of the crucial Christmas season.
The retail industry federation HDE raised its growth forecast for the whole of this year to 1.8 percent from 1.5 percent previously.
"The general economic conditions are right," said HDE president Josef Sanktjohanser.
"The stable situation on the labour market is putting consumers in a good mood."
The key Christmas season was expected to see growth of 1.2 percent over sales in the year-earlier period, or an additional 85 billion euros ($106 billion) in sales.
According to HDE's consumer poll, consumers expect to spend an average 447 euros on Christmas presents this year, 50 euros more than last year.
Sanktjohanser said that the lull Europe's biggest economy is currently going through and souring the investment climate, was not hitting the consumer just yet.
"Private consumption is continuing to prop up the economy," Sanktjohanser said.
Later this week will see the release of German gross domestic product (GDP) data for the third quarter.
Following a contraction in the second quarter, another drop in GDP in the period from July to September would put Germany in a technical recession, but most economists and observers believe the economy will grow, albeit by a minimal 0.1 percent.