Germany: Consumer confidence expected to rise further in February
January 25, 2018
The forward-looking consumer confidence indicator published by the GfK Group for February increased to 11 points, up from 10.8 for January. The result not only beat market expectations, but was also the highest level since October 2001 as consumers remained very optimistic about the economy.
Backward-looking indicators for January, released as part of the consumer climate survey, showed that economic expectations have risen in line with the near two-decade high consumer confidence levels. German consumers consider the economy to be running at full speed, and expect the momentum to continue this year. The sound labor market developments underpin the optimism among households: Unemployment continues to fall, but a high number of vacancies remain. It is also possible that the start of formal coalition talks between the CDU and the SPD boosted the outlook further. On 21 January, the SPD party congress voted in favor of entering formal coalition talks.
By the same token as economic expectations, income expectations and propensity to buy also rose robustly. Chiefly buttressed by the strong performance of the economy, labor market dynamics supported higher income expectations. Subsequently, economic and income expectations reinforced consumers’ propensity to buy.
Germany Private Consumption Forecast
FocusEconomics Consensus Forecast panelists expect private consumption to expand 1.7% in 2018, which is up 0.1 percentage points from last month’s estimate. For 2019, panelists see private consumption growing 1.6%.
Author: Jan Lammersen, Economist