Germany: Consumer confidence drops slightly on risk of Grexit; remains high by historic standards
June 25, 2015
In July, the mood among German consumers recorded a first moderation following eight consecutive months of improving sentiment. The forward-looking consumer confidence indicator published by the GfK inched down from June’s over-13-year-high of 10.2 to 10.1 points for July, coming in slightly below the 10.2 points that markets had expected. According to GfK, “the previously unsuccessful attempts to find a solution to the debt crisis in Greece as well as the country's impending default now appear to be dampening German consumers' economic outlook.”
In addition to the overall consumer confidence indicator, which estimates consumer confidence in the coming month, the GfK elaborates on three sub-indicators, which refer to the previous month. In June, households’ expectations for the overall economy worsened notably over the previous month. GfK pointed out that, “the crisis in Greece is now affecting the Germans' economic confidence,” and that, “the indicator's upward trend has stopped for the time being.” Consumers’ willingness to buy also recorded a moderate decrease in June, on the back of increased economic uncertainty and a higher tendency to save. Conversely, households’ income expectations rose and reached the best result since reunification, driven by a strong labor market, several recent collective bargaining agreements that lead to wage increases and subdued inflation which lifts real incomes.