Germany: Consumer confidence holds firm despite ongoing debt crisis and recession fears
September 27, 2011
Confidence among consumers stabilized, undeterred by the intensification of the debt crisis and volatile financial markets. The GfK Institute reports its forward-looking indicator to remain unchanged in October at the 5.2 points recorded in September. The reading overshot market expectations that the index would fall to 5.0 points. That said, the October result, along with September, marked the lowest confidence level since November 2010. While the overall consumer confidence indicator refers to October, the GfK Institute also publishes three sub-indicators (economic expectations, income expectations and buying propensity), which refer to September. Consumers' economic expectations and their propensity to buy deteriorated over the previous month in the wake of a deepening debt crisis. However, income expectations improved in September and more than compensated for the loss registered in the previous month. According to the Institute, the positive reading reflects the healthy state of the German labour market. In September, unemployment dropped to 6.6% from 7.0% in August, which represented the lowest level in more than two decades.
Author: Ricardo Aceves, Senior Economist