Germany: Consumer confidence slips for second straight month
April 27, 2011
Consumer confidence deteriorated, amid fears of rising inflation and uncertainty in the global economic outlook. The forward-looking consumer confidence indicator published by the GfK Institute fell from 5.9 points in April to 5.7 points in May, falling short of market expectations, which had seen the index inching down to 5.8 points. The fall marked the second consecutive drop after the index reached a record high in March. While the GfK's overall consumer confidence indicator refers to May, the institute also publishes three sub-indices (economic expectations, income expectations and buying propensity), which refer to April. According to the GfK, both the economic expectations and income expectations sub-indices fell over the previous month amid increasing fears that energy prices would rise even further in the months ahead, as a consequence of the escalating political unrest in North Africa and the Middle East. In addition, consumers were concerned about the duration of Japan's nuclear crisis. In contrast, the propensity to buy remained virtually unchanged over the previous month as a result of the healthy economic situation in the country, in particular the positive developments in the labour market, which, according to figures from April, the unemployment rate fell to 7.3%, down from 7.6% in March. According to the institute, the strength of the labour market gives consumers planning security for larger purchases in months ahead.
Author: Ricardo Aceves, Senior Economist