Consumer confidence in Germany is edging higher as shoppers feel more optimistic about the economic outlook, according to a new survey today.

The survey is the latest in a string of hopeful indicators for Europe's biggest economy.

The GfK research institute said its forward-looking confidence indicator stands at 5.9 points for March - up from 5.8 in February.

Consumers' economic expectations continued to brighten amid predictions that economic growth will return in the current quarter after declining in the three months from October to December, the group said.

Those predictions have been fueled lately by improvements in other indicators - notably the institute's closely watched survey of business confidence, which has risen for four consecutive months.

The German economy shrank by 0.6% in the fourth quarter of 2012 compared with the previous three-month period.

A leading think tank, the German Institute for Economic Research, forecast today that the German economy will grow by 0.3% in the current quarter as companies' confidence increases along with orders - even from other countries in the 17-nation euro zone.

That would keep Germany out of recession, commonly defined as two consecutive quarters of shrinking output.

Consumers' optimism is being fed by a solid job market. German unemployment stood at 7.4% in January, comparing favourably with some of the countries worst-hit by Europe's debt crisis.

GfK said the labour market situation will be key to determining how consumer confidence develops this year.