Consumers’ spending mood trims weak economy
Despite the weakening economy, bundesburgers remain in a buying mood.
According to the monthly consumer climate survey conducted by the gfk market research institute, the economic expectations of the people of germany have fallen to their lowest level in more than six years, but consumers continue to have a positive view of the development of their own income.
For september, market researchers forecast a value of 9.7 numer points, unchanged from the previous month, as the gfk announced in nurnberg on wednesday. Before that, the value had fallen three times in a row.
The trade conflict with the USA, which threatens to impose tariffs on german exports as well, and the ongoing discussions about brexit with or without an agreement, mean that the risk of a recession in germany will continue to increase in the eyes of consumers, explained gfk consumer climate expert rolf burkl.
As a result, the respondents’ economic expectations fell by 8.3 points in august and slipped to minus 12 points – the lowest level since january 2013. In contrast, income expectations declined only slightly in august – by 0.7 pp to 50.1 pp. Compared to the previous year, there was only a slight loss of one payer, burkl emphasized.
Whether the income indicator will be able to maintain its good level in the future will depend above all on the situation on the labor market. "For the consumer climate and stable domestic demand, it would be important for the labor market to remain stable," the expert warned.
The announcement of short-time work by some companies shows that the employment situation is becoming more difficult, especially in sectors dependent on exports, such as the automotive industry and its suppliers. On the other hand, there is still a high demand for workers, especially in the service sector.
Nevertheless, consumers are still prepared to make coarser purchases. According to the gfk, the propensity to buy rose by 2.5 points in august to 48.8 points, following declines in the previous month, as burkl said. The propensity to consume and income expectations thus defied the current economic downward spiral.
German economy suffers from trade conflicts and the cooling of the global economy. This is putting pressure on the mood of local companies: the important ifo business climate index fell in august to its lowest level since november 2012. In the second quarter, gross domestic product contracted by 0.1 percent compared with the previous quarter. At the beginning of the year, europe’s largest economy had grown by 0.4 percent.
The gfk study is based on around 2,000 monthly consumer interviews commissioned by the european union. The consumer climate not only refers to spending in the retail sector, but also includes services, rent, travel and healthcare.
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