Germany: Consumer confidence drops to over two-year low in August
Consumer sentiment eased further in August, as the GfK Consumer Climate index inched down to an over two-year low of 9.7 in August from 9.8 in July, while backward-looking data for July highlighted the current dichotomy in the German economy; “it is apparent that the global economic slowdown, trade conflict and Brexit discussions are having an ever increasing impact on consumer confidence”, GfK noted.
Economic expectations dropped markedly in July and fell into pessimistic territory for the first time in over three years. In fact, economic expectations reached its lowest value since November 2015. The outlook on the economy is chiefly affected by lingering trade tensions and the uncertain Brexit outcome as well as the global loss of economic momentum. In the same vein, propensity to buy dropped to its lowest reading in nearly four years, but remained healthy overall, likely reinforced by households’ strong income expectations as the labor market remains tight—unemployment stood at 5.0% in June. However, data also suggests that the “employment boom of the past few years [is] slowly coming to an end”.