Germany: Consumer confidence improves despite fears of escalating debt crisis
October 25, 2011
In spite of the gloom surrounding the debt crisis, consumers remain confident on the back of a strong labour market. In November, the GfK Institute projects its forward-looking indicator to inch up to 5.3 points from 5.2 points in October, which contrasts market expectations that have the index falling to 5.1 points. While the overall consumer confidence indicator refers to November, the GfK Institute also publishes three sub-indicators (economic expectations, income expectations and buying propensity), which refer to October. According to the Institute, income expectations improved over the previous month as consumers continue to positively asses the resilience of the labour market. In addition, consumers' propensity to buy increased over the previous month, which, according to the Institute, benefited from the positive income prospects. Moreover, the ?discussions on the stability of the single currency and banks have shaken consumers' trust in the financial markets?, which is likely to make them less prone to save. Consumers' economic expectations worsened over the previous month and fell to the lowest level since August 2009.
Author: Ricardo Aceves, Senior Economist