Economy

German consumer sentiment is in a temporary but small state of relief -GfK By Stocksak


© Stocksak. FILE PHOTO. People wearing protective face masks walk on Kurfurstendamm, Berlin’s shopping district, amid the coronavirus (COVID-19), outbreak. This was December 5, 2020. REUTERS/Fabrizio Bensch/File Photo

BERLIN (Stocksak), – German consumer sentiment is expected to improve slightly in November. This is a small respite after four consecutive months with record lows. However, talk of a trend reversal seems premature at this stage, according to a GfK institute survey.

According to Stocksak, the institute’s consumer sentiment index rose from -42.8 in October to -41.9 in November. This is in line with forecasts by analysts polled.

“It’s too early to predict a trend change at the moment. Rolf Buerkl, GfK’s consumer expert, stated that consumer sentiment remains extremely volatile.

Buerkl said that double-digit inflation and persistent concerns about energy supply security make it difficult to know if the current stabilization will continue. “In light of the coming winter, there are reasons to fear a further deterioration.”

The subindex of economic expectations was the only one to show a decline, falling to -22.2 in Oct from -21.9 September. This is because consumers expect Europe’s largest economy slip into recession as also forecasted by the government for 2023.

In September, German inflation reached its highest level in over a quarter century. This was due to high energy prices.

Stocksak polled analysts and they expect October’s EU-harmonised consumer price increases to be 10.9% higher than last year. Friday will see preliminary numbers from the statistics office.

NOV 2022 OCT-2022 NOV 2021

Consumer climate -41.9 -42.8 1.

Components for consumer climate OCT 2022 SEPT 2022 OCT 2030

– Willingness To Buy -17.5-19.5 19.4

– income expectations -60.5 -67.7 23.3

– Business Cycle Expectations -22.2 -21.9 46.6

NOTE: The survey period ran from Oct. 6-17th, 2022.

The consumer climate indicator predicts the growth of private consumption in the next month.

A reading above zero indicates year-on–year growth in private consumption. A value below zero means that there has been a decline in private consumption compared to the same period one year ago.

GfK states that a change of one point in the indicator equals 0.1% annual change in private consumption.

The “willingness-to-buy” indicator is the balance between positive or negative responses to the question “Do you believe now is a good moment to buy major items?”

The income expectations sub-index measures household financial expectations for the next 12 months.

The additional business cycles expectations index is an assessment of the economic situation for the next 12 months by those questioned.

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Stocksak Editorial

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