Germany: Consumer confidence falls amid fears of another global recession
August 25, 2011
Consumer confidence deteriorated for the sixth consecutive month, as consumers fear a renewed global slowdown and that some European countries will not be able to contain their debt crises. In September, the GfK Institute projects its forward-looking consumer confidence indicator to edge down to 5.2 points from 5.3 points in August (initially reported: 5.4 points), which was in line with market expectations. The September result represents the lowest level in consumer sentiment since November 2010. While the overall consumer confidence indicator refers to September, the GfK Institute also publishes three sub-indicators (economic expectations, income expectations and buying propensity), which refer to August. According to the institute, economic expectations and income expectations deteriorated over the previous month, in particular, economic expectations fell to the lowest level in more than a year. The reading reflected concerns that the worsening of the sovereign debt crisis together with mounting fears of a return to a global recession will result in less dynamic development for the German economy. In contrast, the propensity to buy improved over the previous month, which according to the GfK, continues to benefit from anticipated rises in income, in conjunction with ongoing positive developments in the labour market. In August, unemployment remained unchanged at July's 7.0%.
Author: Ricardo Aceves, Senior Economist