Germany’s Consumer Climate Improves

Germany’s GFK survey rose in October. It was a month-to-month rise of 0.4 for the third month in a row. The economic index rose by 5.2 points its smallest rise since May but on the heels of a 10.9 point spurt in September. Income expectations fell by 3.1 points, the first drop in five months but after two large gains. The propensity to buy dropped back by 10.4 points a huge drop and the largest since a drop of 15.7 in May 2008.

Still the Climate index at +4.2 is above its average of 3.3. All of these components are above their average values since 2002. The ‘income’ and ‘propensity to buy’ percentiles are stronger for the count percentiles than for the range percentiles; the standing among past observations is stronger than their range standing between the highs and lows. This means that while the current readings are still well off peak they are in the upper part of the distribution of readings and in the upper region of normal.

The GFK index shows that confidence is still improving in Germany. Germans are relatively more worried about the economy in generally than they are impacted by expectations for income or buying power problems. Still the fact of the matter is that German consumption has not been very strong. And Germany’s Chancellor is out warning that in 2011 there will be another crisis and that unemployment will rise from current levels. I guess that Obama’s pessimistic approach to assessing the economy is spreading abroad.