Stable consumer climate at year-end in Germany
Findings of the GfK Consumer Climate study for December 2011
Despite rising economic risks and further escalation of the debt crisis, Ger-mans are once again more optimistic about the future. In December, eco-nomic expectations increased for the first time in five months. In line with rising economic optimism, consumers are anticipating higher incomes next year, with the indicator once again rising from an already high level. Will-ingness to buy did not benefit from the improved mood and registered a severe decline, although the value continues to be very strong.
Economic expectations: downward trend halted
The downward trend in economic expectations came to an end in December, at least for the time being. The indicator fell five months in succession, but has now improved by more than 6 points to stand at -0.9. Consequently it is drawing closer to its former average value of 0 points, which was maintained for many years.
The economic indicator is therefore defying the rising fears of recession and the most recent escalation in the debt crisis in the eurozone. Consumers are evidently more perceptive at present than they have been in previous months to the economic framework conditions, which are still extremely favorable. With most German companies operating at above-average capacity, the labor market is very robust and unemployment figures continue to fall.
Whether this trend can be sustained remains to be seen. The European debt crisis is increasingly likely to become a problem for Germany's export econ-omy if a number of countries are forced to reduce imports due to consolidation pressures on government budgets. This would also affect future export prospects for Germany and is already evident in the growth forecasts for 2012. According to the latest German Federal Bank estimates, gross national product will only rise by 0.6% in the coming year, down from growth of ap-proximately 3% this year.
Income expectations: improvement at high level
Higher economic expectations are an important reason for the improved income outlook in December. The indicator has so far increased by 2.9 points and now stands at 34.0 points, distinctly maintaining its high level.
Employment prospects have a significant influence on the income expectations of consumers. The situation here is very pleasing as employment figures are steadily rising and accordingly unemployment is falling. This is having a positive impact on the development of income rates, which have recently increased more than in previous years. In light of the fact that the labor mar-ket is expected to continue its positive development in the coming year, German households also have high hopes for greater growth in incomes.
Willingness to buy: desire to shop dampened
Willingness to buy did not benefit from the improvement in economic and income expectations in December. The indicator registered a marked decline of 12.9 points, a figure that more than negates the increase of just over 9 points from the previous month. At present, the willingness to buy indicator has a value of 27.4 points, which is still at a comparatively high level.
Despite the drop, German consumers' inclination to shop remains extremely pronounced. Against the backdrop of an escalating financial crisis and with interest levels at a historic low, consumers are still more likely to buy items of higher value than put their money into savings. It is unclear whether Germans' extreme uncertainty with regard to the debt crisis was somewhat settled by the latest EU summit in Brussels as the survey had virtually been concluded at that point.
Consumer climate: stable development
The overall indicator is forecasting a value of 5.6 points for January, following 5.6 points in December too. Consequently the consumer climate is holding steady heading into 2012.
Private consumption is fulfilling its role as a crucial pillar for the economy and will be especially important in the coming year. According to predictions available so far, the upward trend will noticeably lose momentum in 2012. This primarily results from expectations of weaker export developments as the global economy slows down and some major European trading partners are faced with the threat of recession.
Private consumption may therefore have the vital role of ensuring that Ger-many avoids going into recession. In order for consumption to fulfill its in-tended function of boosting the economy, it is essential that Germans once again trust their politicians who must battle the crisis decisively and implement a lasting solution.
These findings are extracts from the "GfK Consumer Climate MAXX survey", which is based on around 2,000 consumer interviews conducted each month on behalf of the EU Commission. The report contains charts, forecasts and a detailed commentary regarding the indicators. In addition, the report includes information on proposed consumer spending in 20 different areas of the consumer goods and services markets. The GfK Consumer Climate survey has been conducted since 1980.
You can find information on the development of the indicators in the third quarter in ten further European countries in GfK Consumer Climate Eu-rope at http://www.gfk.com/...
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