Germany: Consumer sentiment expected to remain robust at the outset of the third quarter
June 28, 2018
The forward-looking consumer confidence indicator released by the GfK Group is expected to remain stable at the prior month’s 10.7 points in July. GfK noted that while the trade squabble between the United States and the European Union did not impact the forward-looking sentiment reading, it affected the backward-looking indicators released as part of the consumer confidence index.
The backward-looking indicators for the month of June showed that the intensification of trade tensions between the two blocs, with the United States implementing protectionist measures, had a profound impact on German consumers’ economic expectations.
In contrast, income expectations and consumers’ propensity to buy edged up in June. Income expectations increased on the back of strong labor market dynamics in Germany. Unemployment reached the lowest level since German reunification in May, the most recent month for which data is available, and real wages rose 1.1% in the first quarter of this year over the same period a year ago. According to GfK, the recent increase in inflation—which hit 2.2% in May—has seemingly left consumers unmoved and has yet to affect their propensity to buy.
Author: Jan Lammersen, Economist