German consumer morale brightens further heading into July
Wed Jun 29 2016
Austin Collins (259 articles)

German consumer morale brightens further heading into July

BERLIN German consumer morale reached its highest level in nearly a year heading into July, a survey showed on Wednesday, indicating that private consumption will continue to drive growth in Europe’s biggest economy.


Record high employment, rising real wages and ultra-low borrowing costs are boosting the spending power of Germans, making domestic demand the most important growth driver.

The GfK consumer sentiment indicator, based on a survey of some 2,000 Germans, rose to 10.1 going into July, from 9.8 a month earlier, beating a Reuters consensus forecast of economists for the headline figure to remain unchanged.

The last time it was at this level was in August, after it hit 10.2 in June 2015.

GfK said the survey, which was conducted between May 27 and June 10, also found that expectations for the economy rose for the third consecutive month, to 18.0 from 8.3 the previous month.

However, the date of the survey means the results do not incorporate the outcome of Britain’s vote on June 23 to leave the European Union.

“Consumers clearly see a bright future for the German economy, their spirits are as of yet undampened by discussions surrounding the possible impact on the German economy of the UK leaving the EU,” Rolf Buerkl, a researcher for the Nuremberg-based GfK, said.

“However, it is expected that the current uncertainty in the financial markets will also be felt by German consumers,” he added.

“The extent to which the decision will impact the consumer climate in the coming months also depends on how serious the financial implications will be and how discussions develop within the European Union.”

Consumers were more upbeat about their earnings for the next year, with the index for income expectations rising almost eight points to 59.6 — the highest level on record.

The willingness to buy deteriorated slightly to 54.4, having reached its highest level in a year the previous month.

The German economy expanded by 1.7 percent in 2015, its strongest rate in four years, driven by soaring private consumption and higher state spending on refugees. It is expected to grow by around the same amount this year.


According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent 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.



(Reporting by Michael Nienaber; Editing by Alexander Smith)

Austin Collins

Austin Collins

Austin Collins is our Europe, Asia, & Middle East Correspondent. He covers news related to Stock Market. In past he has worked for many prestigious news & media organizations. He is based in Dubai