Germany: Consumer confidence reaches seven-year high despite geopolitical tensions
July 25, 2014
Confidence among German consumers is still robust despite an escalation in tensions in both Ukraine and Israel. The forward-looking consumer confidence indicator published by the GfK edged up from 8.9 points in July to 9.0 points in August. The print, which represented the highest point in over seven years, barely overshot the 8.9 points the markets had expected.
In addition to the overall consumer confidence indicator, which estimates consumer confidence in the coming month, the GfK elaborates three sub-indicators, which refer to the previous month. According to GfK, in July, the sub-index of income expectations reached the highest level since Germany’s reunification in the 1990’s. Households’ expectations for the overall economy remained virtually unchanged at the previous month’s level, while consumers’ willingness to buy fell slightly over the previous month. The GfK added that Germany’s World Cup win in Brazil, “has evidently also not had any effect on the indicators. This appears to confirm the presumption voiced prior to the event that the consumer mood would not be greatly influenced by the euphoria after winning the World Cup, as it is already at an exceptionally high level.”
Author: Ricardo Aceves, Senior Economist