Germany: Consumer confidence remains steady in November
October 26, 2010
Consumer confidence remains stable, as the economy experiences a considerable upswing, sustained by a solid labour market. The forward-looking consumer confidence indicator for November, released by the GfK Institute remained steady at October's 4.9 points, confirming consumer sentiment at highest level since May 2008. The figure nevertheless, fell short of private sector analysts' expectations, which had seen consumer confidence rising further to 5.1 points. While the GfK's overall consumer confidence indicator refers to November, the institute also published three sub-indices (economic expectations, income expectations and propensity to buy), which refer to October. According to the survey, economic expectations improved over the previous month, while income expectations and buying propensity deteriorated. The economic expectations index continued its positive trend and rose by 2.5 points in October, pushing the index to 56.0 points, which represents the highest level in more than three years. The optimistic assessment mainly reflected a rosier view of the economic recovery, aided by the positive trend in the labour market. Income expectations did not profit from improving economic prospects and fell by 9.2 points in October to 36.0 points, after rising to a nine-year high in September. According to Gfk, the fall may be due to an anticipated rise in electricity prices and the announcement of municipalities to increase fees and charges. Finally, the propensity to buy declined by 8.2 points in October to 22.5 points, amid less upbeat income expectations. Nevertheless, the sub-index is far above its 0-point long-term average.
Author: Ricardo Aceves, Senior Economist