German consumer sentiment on steady path to recovery in November, finds GfK
Business
Expectations for the next 12 months for Europe's largest economy fell for the third time in a row
BERLIN (Reuters) – German consumer sentiment is set to continue to recover heading into November as households are more optimistic about their income prospects, though high prices and bad job market news are diluting those positive factors, a survey showed on Tuesday.
The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), increased more than expected going into November, rising to -18.3 points from a slightly revised -21.0 the month before. Analysts polled by Reuters had expected a much smaller rise, to -20.5.
Income expectations and the propensity to buy improved for the second time in a row, while the propensity to save declined slightly, boosting the overall index to its highest value since April 2022, though still at a low level, found the survey.
Economic expectations for the next 12 months for Europe's largest economy fell for the third time in a row, said the survey.
That tracks with the government's forecast for a 0.2% contraction for 2024, which would mark a second year of decline and cement Germany's place as a laggard among its large eurozone peers.
"The uncertainty caused by crises, wars and rising prices is still very pronounced at the moment and prevents positive factors for consumption, such as noticeable real income increases, from having their full effect," said NIM analyst Rolf Buerkl.
Reports of a rising number of corporate bankruptcies and plans to cut jobs or relocate production abroad are also preventing a more significant recovery, added Buerkl.
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.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
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 represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects respondents' assessment of the general economic situation over the next 12 months.
