German consumer mood has dropped once further, as a one-time lift from the country’s European soccer title faded, adding to concerns that Europe’s largest economy will fail to rebound sustainably this year.
GfK and the Nuremberg Institute for Market Decisions published a forward-looking consumer-climate index for Germany on Tuesday, forecasting a 3.4-point drop in confidence to minus 22.0 points in September.
That reversed the progress recorded in August and is significantly lower than the consensus of analysts polled by The Wall Street Journal, who projected it to be negative 18.4.
German Consumer reported
Consumer confidence is falling after German firms reported a drop in sentiment in the carefully watched Ifo survey, which was published Monday. Last week’s purchasing managers’ survey data showed a drop in August activity, with the industrial sector continuing to struggle.
According to the NIM/GfK survey, consumers’ income expectations for the next 12 months have fallen significantly, pushing down the total indicator. The last time expectations declined drastically within a month was in September 2022, when inflation was nearly 8%.
Apparently, the euphoria of German consumers triggered by the European football championship was only a temporary flare-up that faded after the tournament,” said Rolf Buerkl, consumer analyst at NIM.
News about diminishing job security is also making consumers more pessimistic, implying that a quick turnaround in consumer morale appears improbable, he added.
Consumers’ perceptions of the economy’s future deteriorated, and the gauge of readiness to buy declined somewhat, according to the survey. The German economy had relied on a resurgence in consumer spending to pull it out of a downturn.
Gross domestic product fell in the second quarter of this year, and economists’ optimism that growth would pick up in the rest of 2024 as inflation eased and the European Central Bank slashed interest rates appear to have faded.
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