German consumer morale brightens heading into October
The mood among German consumers brightened unexpectedly heading into October to reach its highest level in a year and a half, a survey showed on Tuesday, in a sign that households continue to support the recovery in Europe’s largest economy.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose to 0.3 points for October, from a revised -1.1 points a month earlier. The reading compared with a Reuters forecast for -1.6.
Both economic and income expectations improved significantly while the propensity to buy rose slightly, GfK said.
Consumers became more optimistic in light of falling coronavirus infections that the fourth wave in the pandemic could be less pronounced than many feared, the survey showed.
“That is why many consumers can once again see scope for restrictions to be eased further,” GfK consumer expert Rolf Buerkl said in a statement.
But Buerkl cautioned that even if consumer sentiment had almost reached its pre-crisis level, it was still too early for talk of a fundamental trend shift.
“Instead, we must first see how the infection situation develops in the winter months and if new restrictions become necessary,” he added.
Consumer spending drove a 1.6% economic expansion in Germany in the second quarter, providing support for an economy which is struggling with supply bottlenecks in manufacturing.
The German government expects the economy to pick up steam in the third quarter but business activity is likely to cool again in the final three months of the year.
The consumer climate indicator forecasts the development 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 ago.
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 the assessment of those questioned of the general economic situation in the next 12 months.