German outlook bleak as consumer sentiment falls again
German consumer sentiment is expected to fall in September, due to declining income expectations and propensity to buy, a GfK institute survey showed on Tuesday.
The institute’s consumer sentiment index fell to -25.5 heading into September from a slightly revised -24.6 in August, below expectations of analysts polled by Reuters of a reading of -24.3.
“The chances that consumer sentiment can sustainably recover before the end of this year are dwindling more and more,” said GfK consumer expert Ralf Buerkl.
Persistently high inflation rates are hindering any improvement in consumer sentiment, said Buerkl.
Since consumer sentiment is likely to remain at a low level in the coming months, private consumption will not make a positive contribution to overall economic development this year and will rather be a burden on growth prospects in Germany, the GfK said.
The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 per cent in private consumption.
The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.
Reuters – Maria Martinez