Germany: Consumer confidence expected to remain stable at the start of the new year
December 21, 2018
The forward-looking GfK Group Consumer Climate index is expected to be stable at December’s 10.4 points in January. The stable reading reflects a mixed picture in the underlying, backward-looking indicators for December.
Economic expectations dropped markedly in December to the lowest level since February 2017. Economic optimism is being dragged down by the ongoing trade spat between Washington and Beijing as well as tensions between the U.S. and the EU and Brexit uncertainty. Consumers expect these developments to weigh on export growth and put a lid on the economy’s performance. Propensity to buy also fell despite a tight labor market and still-accommodative monetary policy, which discourages saving money. It should be stated that despite easing, propensity to buy remains relatively high due to the aforementioned drivers. Moreover, income expectations rose in December and likely further fueled still-elevated propensity to buy. The tight labor market situation, which should remain healthy in the year ahead, buttresses consumers income expectations in the face of less optimism regarding the trajectory of the economy.
Author: Jan Lammersen, Economist