German Consumer Sentiment Improves Heading into November
BERLIN (Reuters) – German consumer sentiment is set to continue to recover heading into November as households are more optimistic about their income prospects. However, high prices and negative job market news are diluting those positive factors, according to a survey released on Tuesday.
Key Findings
- The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), increased more than expected, rising to -18.3 points from a revised -21.0 the month before. Analysts had anticipated a smaller rise to -20.5.
- Income expectations and the propensity to buy improved for the second consecutive month, while the propensity to save declined slightly, boosting the overall index to its highest value since April 2022, though it remains low.
- Economic expectations for Germany fell for the third time in a row, aligning with the government's forecast for a 0.2% contraction in 2024, marking a second year of decline.
Analyst Insights
NIM analyst Rolf Buerkl stated, "The uncertainty caused by crises, wars, and rising prices is still very pronounced at the moment, preventing positive factors for consumption, such as noticeable real income increases, from having their full effect." Reports of increasing corporate bankruptcies and plans to cut jobs or relocate production are also hindering a more significant recovery.
Consumer Climate Indicators
| Indicator | NOV 2024 | OCT 2024 | NOV 2023 |
|---|---|---|---|
| Consumer Climate | -18.3 | -21.0 | -28.3 |
| Willingness to Buy | -4.7 | -6.9 | -16.3 |
| Income Expectations | 13.7 | 10.1 | -15.3 |
| Business Cycle Expectations | 0.2 | 0.7 | -2.4 |
Note: The survey period was from Oct. 4-15, 2024. The consumer climate indicator forecasts the progress of real private consumption in the following month. A reading above zero signals year-on-year growth in private consumption while a value below zero indicates a decline.
- According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.
- The "willingness to buy" indicator reflects the balance between positive and negative responses to whether it is a good time to buy major items.
- The income expectations sub-index indicates expectations about household finances over the next 12 months.
- The business cycle expectations index reflects the general economic situation expected over the coming 12 months.
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