Consumer climate: interim low or downward trend?

GfK consumer climate survey in July 2004

Nuremberg (ots) - The mood of German consumers continues to be fragile.

In the previous month, all consumer climate indicators, i.e. economic outlook, income expectations and the propensity of consumers to make signal a positive change in the trend were not confirmed in July. The indicators for economic outlook and income expectations fell by more than they had gained in the previous month. The propensity to buy also returned to a downward trend. Accordingly, the forecast consumer climate figure for August - following a revised 3.9 points in July - is significantly lower at 3.4 points.

Consumers are gradually losing any hope of a consistent upturn in the economy in the near future, which would also bring about a much hoped-for recovery in the labour market. With unemployment numbers continuing to be high, a widespread debate on sites in various sectors being relocated to other countries, discussions about longer working hours and, most recently, the introduction of combined unemployment and social security benefits under Hartz IV, are fuelling doubts that the private sector and politicians are not in a position to boost economic recovery - neither for businesses nor for "the man in the street".

These are the first signs confirming concerns of recent months that private consumption may not be able to boost economic development this year. A sustained positive change of domestic demand will only arise if consumers understand that there has been a fundamental easing of the labour market and that the end of financial concerns, and in some cases people's fears for their livelihood, is in sight.