Consumer climate: as changeable as the April weather

Findings of the GfK consumer climate survey in April 2004

Following the deterioration of the consumer mood in March, German consumers were slightly more optimistic again in April.

Consumers were considerably more optimistic in April than in March, at least in terms of the economic outlook and their income expectations. However, they were still reluctant to commit to large-scale purchases over the next few months. While the economic outlook and income expectations indicators are now approaching the long-term average of 0, the buying propensity indicator remains in minus figures and is therefore the prime obstacle to economic recovery in Germany.

While financial analysts (ZEW) assume poor prospects of economic recovery, according to the ifo index, companies, like consumers, view the economic outlook with more optimism than in the previous month.

However, we should not be deceived by the more positive economic outlook in April. Consumers continue to feel uncertain and at this moment, we can speak of nothing more positive than a stagnation in the mood. Presumably, the current debate about transferring jobs abroad is depressing the mood and, in light of this, consumer expectations over the coming months will remain a source of interest.

In view of current developments in the consumer mood indicators, the consumer climate will be only slightly improved to 5.2 points in May following the revised 5.0 points in April. All the signs suggest that domestic demand will barely contribute to an economic upturn in Germany in 2004. As long as there are no definite positive signs from the labour market, supported by other clear signs of economic recovery, the consumer mood will remain muted. Further information: www.gfk.com