GFK Survey Jumps For October

GFK goes its own way - The GFK survey of German Consumer Confidence rose sharply in its look-head assessment of October. The index rise to 4.9 from 4.3 was a stunner given the withering expectations for Germany. Although various German industrial-based surveys are showing faltering expectations, the GFK consumer survey is not. Even the industrial surveys are giving us some mixed signals as they are generally showing current conditions are improving but expectations have been cut back or even slashed in some cases.

In September another Euro-Area member has posted a surprisingly stronger consumer confidence reading, Italy. Italy's survey from ISAE leapt from 104.1 to 107.2, marking its highest reading in five months by a long shot. This is despite Italy having debt problems and being forced to pay higher spreads for its national deficit funding.

It is not clear where this bump up in sentiment is coming from. Europe had seemed to be on a strong upswing until the Greece crisis pulled everything down then set in motion a chain of austerity moves. Now the conventional wisdom is that Europe will be held back by this premature tilt to austerity led by of all countries Germany which is supposed to be Europe's engine of growth. For a while Germany continued to fire on all cylinders then it began to spin off some weaker numbers particularly from its outlook surveys. Now the German consumer seems to be feeling better along with the Consumer in Italy.

It's too soon to tell what will win this tug of war. Maybe the industrial confidence data weakened too abruptly. As we continue to point out, industrial expectations readings often fall when the economy is doing well just because it can't continue to get better at a high rate; at some point practical pessimism sets in. Is that the case is Germany? Or, have true pessimists written Germany off too soon? These disparate trends will bear watching.