Berlin  Expectations of higher wages and falling unemployment have led to a surprise jump in German consumer confidence, a survey released Monday showed.

The Nuremberg-based market research group GfK said its forward- looking consumer climate index climbed to 5.9 points for May from an upwardly revised 4.8 points in April. This compared to a previous April reading of 4.5 points.

Analysts had expected the index, which is based on responses from about 2,000 consumers, would fall to 4.5 points in May.

The release of the GfK report followed the publication earlier this month of key indicators showing increasing gloom among German business and investors as a result of renewed inflationary pressures and growing international economic uncertainty.

But the GfK said releasing the report: "Despite continuing turbulence in international financial markets and higher food and energy prices, German consumers are becoming more optimistic."

"Conditions have improved for consumption to pick up this year," the group said, pointing to the improvement in unemployment and recent higher pay settlements after a protracted period of wage stagnation in Germany.

The GfK report will add to hopes that Germany will be able to withstand much of the economic fallout from the US subprime mortgage market crisis with many economists believing that private consumption could emerge as a key driving force behind growth in Europe's biggest economy this year.

While GfK's overall consumer confidence index refers to the next month, its three sub-indexes - economic expectations, income expectations and buying propensity - refer to the current month.

The consumer climate indicator's sub-indexes which measure economic expectations, income expectations and buying propensity during the current month all rose.

While the index gauging economic expectations rose to 23.3 points in April from 15.0 points in March, the index measuring income expectations jumped to 10.5 points from
1.5 points in March and consumers' propensity to spend rose to minus 4.7 from minus 10.2.

However, the latest consumer confidence survey coincided with signs of resurgent inflation as oil prices shot up to a record high just short of 120 dollars a barrel.

As a result the GfK warned: "Inflation must weaken in the next few months if consumer confidence is to continue its positive developments." (dpa)