GfK Consumer Climate Is Unchanged Month-to-Month

GfK provides a forward-looking peek at German consumer confidence. Its estimate for January sees confidence at the same level as in December at an index reading of 10.4. This reading is in the 91st percentile of all readings since January 2002. The German climate remains rarified.

However, the economic climate (where readings are only up-to-date through December) is considerably less robust, having fallen off for a series of months; now the economic climate standing is only in its 59.8 percentile, still North of its median but far closer to being 'average' than to being 'wonderful.'

Income expectations (that also lag by one month) rebounded in December but the series has a legacy of recent weakness. Still, income expectations have a very strong standing at their 88th percentile.

Finally, the propensity to buy (where the reading is up-to-date through December) has fallen off in December after popping higher in November. The propensity to buy has a standing in its 78.4 percentile, a relatively firm reading that I would judge as solid but short of being 'strong.'

These ratings wrap up the GfK story for January. Despite turbulence in the EMU stemming from conflict with Italy and Brexit negotiations with the U.K. and some domestic political rejiggering, Germany's assessment of its confidence is still quite strong although we need to watch the clearly deteriorating views of the economy itself. At some point, consumer confidence has to be underpinned by economic performance (except maybe in Italy but more on that below).

The table offers the most up-to-date views available on Italy, France and the U.K. the next largest economies in the EU (at least for a while longer). These readings are only up-to-date through November and lag the GfK message by a whopping two months.

Italy continues oddly to post queue standings for confidence that rival Germany's. This is odd because while German GDP has advanced strongly since the Great Recession, Italy still has real GDP below its cycle peak after a decade of 'growth.' Yet, Italian confidence is nearly 'on the moon' with a 90th percentile standing. France does not yet show readings for the period of the yellow vest protests, but already in November the French reading is below its median (which occurs at a queue standing of 50) with a queue or count percentile standing at its 41.4 percentile. Confidence in France notched lower in October and stayed there in November. The U.K. also slumped in October and stabilized in November. Like France, U.K. confidence is close to the 40th percentile mark (39.9%). Of course, the U.K. is battling for its Brexit deal. These data are not fresh enough to include any of the new disappointment about the way the EU has played hard-ball with the U.K. over Brexit or the rising prospects for a 'hard' Brexit. Still, U.K. confidence is lagging. French confidence is lagging. Italians may be raising a stink about their allowable fiscal deficit, but none of that seems to affect their perceptions of prospects for 'la Dolce Vita.'