Germany: Consumer confidence falls as views on the economy sours
German consumer sentiment came in slightly below expectations in October at 9.8, down from the expected 9.9. Moreover, consumer confidence is forecasted to fall again in November to 9.6 as backward-looking data for October, which is released at the same time, showed a somewhat mixed picture underlying the expected change in sentiment.
Economic expectations among consumers soured notably in October amid a host of disappointing economic data and increased calls for fiscal stimulus as Germany is expected to enter a technical recession in the third quarter. In fact, economic expectations have not been this low in nearly seven years as the Sino-American trade war, lingering Brexit uncertainty and the accompanying global economic moderation are spilling over into the domestic economy: a number of car manufacturers and suppliers have announced redundancies. “This loss of jobs at car manufacturers will be further intensified by the forthcoming transition to electro-mobility”, according to GfK, which releases the consumer confidence index. Income expectations consequently fell notably in October as well to a six-year low. However, income expectations remained elevated nonetheless. While consumers’ propensity to buy also moderated, it “maintained its excellent level in October” as households’ “propensity to buy has successfully resisted the economic downturn so far.” This is partly due to the still-tight labor market despite reported job shedding and low interest rates making saving an unattractive option.