Germany: German consumer confidence moderates slightly heading into October
September 28, 2016
Heading into October, the mood among German consumers weakened slightly but still stayed at a high level. The forward-looking consumer confidence indicator published by the GfK Group edged down from September’s 10.2 points, which had marked the highest reading since June 2015, to 10.0 points for October. The GfK commented that the slight setback showed that, “consumer sentiment is not completely immune to the prevailing rise of uncertainty […]. This uncertainty is first and foremost being fueled by the greater perceived terror threat in Germany as well as by the decision made by the British public to vote to leave the European Union.”
In addition to the overall consumer confidence indicator, which estimates consumer sentiment in the coming month, the GfK provides three sub-indicators, which refer to September. In fact, all three sub-indices moderated: consumers’ economic expectations, income expectations and households’ willingness to buy. In the GfK’s view, the decline in households’ expectations for the general economy mainly reflected increased uncertainty over the UK’s Brexit vote coupled with somewhat weaker growth prospects for Europe and Germany and increased public awareness of terror. Income expectations remained strong in September, despite a drop, reflecting a healthy labor market, rising wages and subdued inflation. Similarly, consumers’ willingness to buy fell slightly, but remained high overall, supported by positive prospects for the labor market and the ECB’s low-interest-rate policy.