Germany: Consumer confidence drops to over two-year low in July
German consumer confidence dipped to an over two-year low of 9.8 in July from 10.1 in June; July’s result marked the second consecutive month of falling consumer sentiment. Meanwhile, backward-looking data for June showed a diverging trend.
Economic expectations bounced back somewhat in June, however remained far below the level recorded in the same month a year ago. Economic expectations are suffering from cooling global economic momentum, the Brexit mystery, and the trade war. These factors have weighed on Germany’s important export-oriented sectors and thereby cloud the economic outlook. Income expectations dropped at a quick pace in June as the job market is very tight which could mean that an end to the employment boom is forthcoming: anecdotal evidence hints at fears about job security. This is particularly the case in the automotive sector, which is feeling the pinch from trade conflicts and a slowing global economy as well as “the transition from the combustion engine to e-mobility.” Moreover, the noticeable slowdown in the Chinese economy, which grew at a 27-year soft pace in Q2, further dims the prospects for the automotive sector. Despite the seeming gloom and doom, propensity to buy rose in June.