BERLIN (Reuters) - The mood among German shoppers deteriorated unexpectedly for the second month in a row heading into September, a survey showed on Wednesday, casting some doubt about the strength of a consumer-led upswing in Europe’s largest economy.
Household spending was the main growth driver in the first half of the year, together with higher state consumption and investments in construction, providing a buffer against an uncertain trade environment.
The GfK research institute said its consumer sentiment indicator, based on a survey of around 2,000 Germans, fell to 10.5 going into September from 10.6 a month earlier.
Analysts polled by Reuters had forecast an unchanged reading of 10.6.
“While economic expectations improved, income expectations and the propensity to buy declined a bit,” GfK researcher Ralf Buerkl said. But all sub-indicators remained on a relatively high level overall, he added.
The dip in income expectations is probably linked to the recent rise in energy prices that has propelled German inflation to above 2 percent, Buerkl said.
“Based on the continuing low interest level, it might be obvious to some consumers that savings are increasingly losing value due to inflation,” he said.
“A further increase in inflation would certainly dampen the consumer climate,” Buerkl added.
The propensity to buy remained relatively high despite edging down, Buerkl said, pointing to Germany’s booming labour market, record-low unemployment and increased job security.
“This ensures planning security with consumers, particularly when it involves larger expenses,” Buerkl added.
SEPT 18 AUG 18 SEPT 17
Consumer climate 10.5 10.6 10.9
Consumer climate components AUG 18 JULY 18 AUG 17
- willingness to buy 55.2 56.2 58.1
- income expectations 52.6 57.5 61.4
- business cycle expectations 22.2 15.7 30.4
NOTE - The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year ago.
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 Joseph Nasr