Consumer climate: Germany divided

Findings of the GfK consumer climate survey in September 2004

Nuremberg, Germany (ots)- Trends in the indicators reflecting the mood of German consumers, varied over the last two months, and in some cases the indicators declined. In September, however, the picture is more stable and positive, with all indicators showing an upward trend.

German expectations of economic growth increased for the second time in a row. The indicator rose 6.5 points to minus 11.9, regaining the level of June.

Following a decline over the past two months, income expectations of consumers improved again by seven points to minus 12.3 per cent. However, the difference in the consumer climate between eastern and western Germans evident in the previous month has continued. While the indicator for income expectations deteriorated in eastern Germany, it improved in western Germany.

With a slight increase of 0.4 points to minus 27.4 in September, the propensity to buy indicator remained at the same level as the previous month and 4 points higher than in September 2003. An East/West comparison again shows that western Germans are beginning to spend again while consumers in eastern Germany remain hesitant when it comes to making larger purchases.

Stabilization in the indicators for income expectations, economic outlook and propensity to buy has brought a halt to the downturn in the consumer climate indicator. For October, GfK is forecasting a consumer climate indicator of 2.4, up from the revised figure of 2.1 for September. As before, private consumption will fail to provide any major boost to the economy, a trend which is likely to continue until the end of the year. Decisive factors which could effect a reversal in the trend would be economic growth and a positive sign from the labour market.