Consumer climate: year-end optimism

Findings of the GfK consumer climate survey in December 2004

Nürnberg, Germany -

The mood among consumers remains unclear. As in the previous months, the indicators used to measure consumer mood provide mixed information.

For the third consecutive month, the indicator used to express consumers�' views on the economic outlook lost ground. Following the 0.5 point drop in November, the economic outlook indicator lost a further 1.3 points and now stands at -18.3. This means that the indicator is almost 17 points down on the figure at the end of 2003.

The indicator for income expectations, which has virtually adhered throughout this year to the pattern of an increase in one month being followed by a decrease in the next, has stabilized just above the previous month�'s level. Following a 2.3 point rise in December, the indicator now stands at -13.5 and is therefore five points below the comparable figure for the previous year.

The number of larger purchases made by consumers is encouraging. Following a period of virtually no change during the past few months, when the indicator moved between -27 points and -28 points, the indicator recovered 2.1 points in December to stand at -22.3.

Thanks to the rise in the propensity to buy, in particular, the consumer climate overall has also seen an improvement. For January 2005, GfK forecasts a figure of 2.9 points following the revised figure of 2.6 points for December 2004. This reflects a slight increase in domestic demand potential in the coming year. However, a marked improvement in the employment market is needed to achieve a significant breakthrough. Anxiety about job losses remains the major obstacle to a sustained trend reversal in the consumer mood and, in particular, to people�'s willingness to spend.

Dr. Ulrike Schöneberg,

Tel. +49-(0)911-395 2645,