Germany Consumer Confidence


Germany: German consumer confidence weakens in November on concerns of potential rise in unemployment

October 28, 2015

Confidence among German consumers is weakening gradually and decreased in November for a third successive month. The forward-looking consumer confidence indicator published by the GfK Group inched down from October’s 9.6 points to 9.4 points in November, meeting market expectations. Confidence has moderated in the past months since peaking at an over-13-year high in June.

According to GfK, even though November’s reading represents a third consecutive decline, “and the lowest level since February, the indicator is still very satisfactory. The excellent development of the retail sector is currently an important pillar of the consumer climate. Future consumer sentiment will predominantly depend on whether the uncertainties currently surrounding the progression of the labor market continue to intensify. If this is the case and if employees are increasingly worried about their jobs, the propensity to consume will suffer a major setback. Concerns about unemployment are reducing the certainty with which consumers can plan for the future. In turn, this is having a particularly negative effect on the decision to make larger purchases.”

In addition to the overall consumer confidence indicator, which estimates consumer sentiment in the coming month, the GfK elaborates on three sub-indicators, which refer to the previous month. In October, households’ expectations for the overall economy worsened for a fifth consecutive month and dropped below their long-term average for the first time since May 2013. GfK pointed out that rising pessimism regarding the economic outlook mainly reflects increasing concerns that unemployment may grow. According to the GfK, consumers stated that their main reason for rising labor market worries was the, “persistently large and sometimes uncontrolled influx of asylum seekers,” while, ”consumers do not feel that the scandal surrounding Volkswagen […] presents much of a risk for the labor market.” However, income expectations stabilized at a high level in October, proving robust to the less favorable economic outlook and largely reflecting that low inflation is boosting consumers’ purchasing power. Meanwhile, consumer’s willingness to buy recorded a fifth moderate decline in a row due the weaker economic outlook, but still remained fairly high.

FocusEconomics Consensus Forecast panelists expect private consumption to expand 1.9% in 2015, which is down 0.1 percentage points from last month’s estimate. For 2016, panelists see private consumption growing 1.7%, which is unchanged from last month’s Consensus.

Author: Teresa Kersting, Economist

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Germany Consumer Confidence Chart

Germany Consumer Confidence November 2015

Note: GfK Consumer Climate Index.
Source: The GfK Group.

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