The consumer mood in Germany is notably more
optimistic in November than in the previous month. Economic and income
expectations registered considerable increases and willingness to buy reached a
seven-year high, according to GfK, the consumer research group. Following a
revised value of 7.1 points in November, the overall indicator is forecasting
7.4 points for December.
The apparent trend towards recovery of the German economy has not gone unnoticed
among consumers. Both economic and income expectations rose sharply upwards.
Willingness to buy also improved again from its already extremely high level,
partly stimulated by the European Central Bank lowering interest rates.
Economic expectations: pace of German economy picks up: In
November, Germans' economic expectations improved for the third consecutive
time. At +9 points, the rise is in fact very strong. The indicator is currently
at 20.3 points and therefore the highest it has been in more than two years. The
value was last higher in July 2011, when the indicator was at more than 44
GfK says consumers are evidently expecting the German economy, which is
currently on an upward trend, to pick up further and gain ever more momentum in
the coming months. This optimism is also shared by experts. In its recently
published Annual Economic Report, the German Council of Economic Experts
predicted that gross domestic product (GDP) would increase to 1.6% in 2014,
following a moderate 0.4% this year. Companies agree with this assessment. The
Ifo Business Climate index also climbed to its highest level since spring 2011
in November. German businesses therefore have a confident outlook for the coming
According to experts, a key reason for this is the emerging international
economic revival, which is above all evident in emerging nations such as China
and some Central and Eastern European countries. This is likely to benefit both
the currently sluggish German exports and investment, with the latter also being
boosted by ongoing low interest rates.
Income expectations: noticeable improvement: After falling for
the past three months, income expectations jumped up in November. The income
expectations indicator rose by 12.5 points and is currently at 45.2 points. To
find a higher income expectations value from the past, one has to look back
quite some way to March 2001, which is more than 12 years ago, when the
indicator was at 45.7 points.
The excellent income mood this month certainly also benefited from the improved
economic outlook. The emerging signs of a recovery in the German economy are
also causing employment to increase again, albeit moderately. In turn, this is
ensuring that incomes will also record considerable growth rates, which are very
likely to be above the expected rate of inflation and will therefore result in
real income increases for private households.
In its Annual Economic Report, the German Council of Economic Experts predicted
that the disposable income of private households in Germany would increase
nominally by 3.4% next year. In view of the expected price-increase rate of less
than 2%, this will result in significant income growth in real terms.
Willingness to buy: rises to seven-year high: The consumption
mood in Germany remained unbroken in November. Willingness to buy once again
improved on its already very high level, rising by 1.3 points to 45.7 points at
present. The indicator has therefore reached a seven-year high. A higher value
was last recorded in December 2006, when the indicator was at 59.9 points.
Alongside the continued favorable development in employment and real increases
in income, GfK said the recent decision by
the European Central Bank has certainly also played a part in stimulating the
consumer mood. In order to stimulate the economy in the Eurozone, the ECB has
once again cut its benchmark interest rate by 0.25 percentage points. The
propensity to save dropped to a new historic low this month, presumably as a
result of this interest reduction.
The appeal of saving, the alternative to spending, is falling further and
further for consumers. Consequently they are more likely to focus their
financial means on consumption. This is certainly good news for the imminent
Consumer climate: gaining momentum: Following a revised value
of 7.1 points in November, the overall indicator is forecasting 7.4 points for
December 2013. The consumer climate is therefore picking up as the year comes to
an end. The outlook of an increased recovery in the German economy and the cut
in the benchmark interest rate by the ECB provided an additional boost to the
consumer mood at the end of 2013. GfK is confirming its forecast that private
spending in Germany will increase by around one% in real terms in 2013.
Consumption will register clear above-average increases.
For 2013 as a whole, the improvement in GDP is only predicted to be just under
This means that consumers will be the main, decisive pillar of the economy this
year. In addition, the anticipated positive employment situation will ensure
that consumption will continue to play a key role in the overall economic
development in 2014.
These findings are extracts from the “GfK
Consumer Climate MAXX sur-vey”, which is based on around 2,000 consumer
interviews conducted each month on behalf of the European Commission. The GfK
Consumer Climate survey has been conducted since 1980.