German Consumers: More Confident But Slightly Less Willing To Spend

The GfK group, a market research company headquartered in Nuremberg Germany, released data from its July survey of the German consumer today.  Based on the opinions of some 2000 individuals, GfK found a marked improvement in the German consumer's expectations for the economy, as a whole, and for their own income situation. The balance of opinion regarding the economy increased from 5.5% in June to 26.8% in July, the highest excess of optimists over pessimists since October, 2007. A rise of similar magnitude occurred in the balance of opinion regarding personal income expectations, which rose to 29.1% from 8.2% in June. This balance was, however, smaller than the 35.2% recorded for April of this year.

In spite of the rise in expectations for the economy and for personal incomes, the German consumer is somewhat less enthusiastic about spending. The balance of opinion regarding the propensity to spend dropped from 30.4% in June to 27.9% in July. This balance is, however, well above the average balance of -6.7% over the history of the series. Balances of opinion regarding the economic outlook, income expectations and propensity to spend are shown in the first chart.

On the basis of this month's data, GfK forecasts the next month' consumer climate. Since its inception in January 2002, the balance of opinion regarding the consumer climate has varied within a fairly limited range-- -3.5% to 9.1%--with a mean of 3.3%. The July data are currently suggesting a favorable balance of 3.6% for July and a further improvement to 3.9% for August. As can be seen in the second chart, these percentages are slightly above the mean of the series.

GERMANY GfK SURVEY(% balances)	Aug 10	July 10	Jun 10	May 10	Apr 10	Mar 10	Feb 10	Jan 10
Consumer Climate	3.9	3.6	3.5	3.7	3.4	3.2	3.3	3.4
Economic Outlook	--	26.8	5.5	3.9	22.5	4.5	-5.6	1.5
Income Expectations	--	29.1	8.2	23.7	35.2	13.5	12.0	12.5
Propensity to Spend	--	27.9	30.4	18.1	21.6	23.4	24.2	25.4