Germany: Mood among German consumers steady in February
January 27, 2016
In February, the mood among German consumers was unchanged. The forward-looking consumer confidence indicator published by the GfK Group rested in February at January’s 9.4 points, which was a notch better than the 9.3 points that markets had expected. Consumer confidence has stabilized in the past months after moderating from an over-13-year high in June 2015.
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 January. In January, households’ expectations for the overall economy improved for a second consecutive month, remaining in optimistic territory. GfK commented on the reading in stating that, “despite a number of risks, including the threat of terrorist attacks and the refugee crisis, consumers still believe that the German economy will continue to grow modestly in the next few months. Above all, this improving optimism can be attributed to the extremely strong labor market and rising employment.” Consumers’ willingness to buy also registered a moderate increase, reaching the highest reading since July of last year. According to the survey report, consumers’ willingness to buy was boosted by a solid labor market, rising real incomes and a subdued propensity to save. Conversely, income expectations fell slightly, but nevertheless remained at a very high level. Rising employment, strong income growth and low inflation all contributed to income expectations remaining high. Regarding future developments, the GfK noted that, “however, in the next few months the escalating terror threat and the rising fears among certain groups of the population that Germany could eventually become overstretched by the persistently high influx of refugees and asylum seekers may cause consumer confidence to wane in the long term. In turn, this would have a lasting impact on the consumer climate.”