Germany: Consumer confidence estimated to inch down in March
February 20, 2020
The forward-looking GfK Consumer Climate index signaled a slight drop in German consumer confidence at the close of the first quarter, with the index easing to 9.8 in March from 9.9 in February, which had marked an eight-month high. Rolf Bürki, consumer expert at GfK, commented that “the spread of the coronavirus has undoubtedly contributed to uncertainty among consumers.”
Backward-looking data for February—which is released at the same time as the forward-looking March estimate—showed a diverging trend: While economic expectations swung from pessimistic territory in January to positive territory, both income expectations and propensity to buy moderated but stayed high. Sentiment regarding the economic outlook improved on the back a strong labor market, with stable employment despite the lingering Sino-American trade conflict and coronavirus worries. The strong labor market situation and expected future wage growth also underpinned healthy, albeit weaker, income expectations. Meanwhile, the European Central Bank’s continued ultra-loose monetary policy played an important role in the still-elevated willingness of Germans to spend; saving is currently an unattractive alternative.
Author: Jan Lammersen, Economist