Germany Consumer Confidence August 2016


German consumers become slightly less optimistic heading into August

In August, the mood among German consumers moderated slightly, but still remained at a high level. The forward-looking consumer confidence indicator published by the GfK Group inched down from July’s nearly-one-year high of 10.1 points to 10.0 points in August. According to the GfK, August’s slight moderation in sentiment was mainly caused by the UK’s vote to leave the European Union. The GfK commented that, “German consumers, too, have evidently been affected by the Brits' decision to leave the EU.”

In addition to the overall consumer confidence indicator, which estimates consumer sentiment in the coming month, the GfK elaborates on three sub-indicators, which refer to July. Households’ expectations for the overall economy fell notably in July, bringing the upward trend observed in the previous months to an end. The GfK pointed out that this setback was mainly driven by consumers’ concerns that the UK’s Brexit vote will hamper economic growth in Germany. Income expectations also decreased in July after having reached the highest level since Germany’s reunification in June. Despite the decline, income expectations remained fairly high, supported by a strong labor market, stable consumer prices, rising wages and July’s increase in pensions. Consumers’ willingness to buy was the only sub-indicator that increased in August, suggesting that, “the Germans' appetite for consumption remains unabated.”

FocusEconomics Consensus Forecast panelists expect private consumption to expand 1.8% in 2016, which is unchanged from last month’s estimate. For 2017, panelists see private consumption growing 1.6%.

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Germany Consumer Confidence Chart

Germany Consumer Confidence August 2016 0

Note: GfK Consumer Climate Index.
Source: The GfK Group.

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