Thursday, 25 March 2010

Consumer Climate in Germany With (a) Spring in its Step

Findings of the German GfK consumer climate study for March 2010

Nuremberg, March 25, 2010 – The downward trend in the GfK con-sumer climate will come to a halt in April this year – at least for the time being. Both economic and income expectations in Germany are improving, although the propensity to buy has recorded slight losses. The overall indicator is forecasting a value of 3.2 points in April, following the same value of 3.2 points in March.

The German labor market is continuing to prove amazingly robust this year. This stability, in conjunction with increasing signs of a recovery in the German economy, are currently triggering a significant rise in economic optimism among Germans. Income expectations have also benefited as a result in March, recording a moderate improvement. In contrast, the propensity to buy is suffering slight losses, although it remains at a good level. The slight weakening in March is probably attributable in the main to the recent considerable petrol price rises. Once more, the strong correlation between price expectations and the propensity to buy is holding true.

Economic expectations: clear growth

Consumers’ economic expectations have recorded a noticeable improvement in March. With an increase of some 10 points, the losses from the two previous months have been more than offset. The indicator currently stands at 4.5 points and has therefore returned to positive figures (i.e. above the long-standing average of 0 points).
The increasing signs of recovery in the German economy, as well as the fact that the generally feared severe job reductions have so far not materialized, have clearly somewhat allayed Germans’ anxieties about redundancy. Excluding seasonal influences, the number of those registered as unemployed has barely increased recently. In view of the severity of the financial crisis which Germany has suffered, this is a highly pleasing result, and is currently boosting the economic optimism of consumers. German companies are currently sharing the positivity of consumers: the Ifo business climate index has also risen considerably in March.

Income expectations: slight increases

In the wake of the significant improvement in economic expectations, the income expectations of German consumers have also recorded growth. However, with a rise of 1.5 points, the increase is considerably more moderate. The indicator currently stands at 13.5 points, which represents an improvement of almost 25 points on the value for the corresponding period of the previous year.
The rising economic optimism of Germans is the major reason why they are also assessing their income prospects somewhat more positively. In the current economic forecasts, experts are increasingly coming to the conclusion that unemployment is likely to develop more favorably than forecast a few months ago. This is having a correspondingly positive impact on income growth. In addition, government measures to boost purchasing power, such as the increase in child allowance and the full tax deductability of health insurance contributions, are having a uplifting effect on income sentiment.

Propensity to buy: marginal losses, but remaining at a good level

The propensity to buy has not been able to profit from the more optimistic economic and income sentiment of German consumers in March this year. The indicator is recording a slight drop of 0.8 points, although, at 23.4 points, it is still at a comparatively high level in comparison with the previous year (13.9 points).
In particular, higher petrol prices have led to rising price expectations among consumers in the past few weeks. Experience shows that this has a dampening effect on the propensity to consume.

Consumer climate: no further decline

The overall indicator is forecasting a value of 3.2 points for April 2010, following the same value of 3.2 points in March this year. The downward trend in the consumer climate has therefore come to a halt, at least for the time being. Previously, the indicator had suffered slight losses for five consecutive months.
It remains to be seen whether the consumer climate will continue to stabilize over the coming months. The further development of the labor market will be decisive in this respect. It must continue to be assumed that unemployment will be higher this year than in 2009. Consequently, GfK is standing by its forecast for private consumption this year, that is, that consumption will not make any significant contribution to macroeconomic development.

The survey

These findings are extracts from the "GfK consumer climate MAXX survey”, which is based on around 2,000 consumer interviews conducted each month on behalf of the EU Commission. The report contains charts, forecasts and a detailed commentary regarding the indicators. In addition, the report includes information on proposed consumer spending in 20 different areas of the consumer goods and services markets. The GfK consumer climate survey has been conducted since 1980.
The next publication date will be April 27, 2010.
Further information: Rolf Bürkl, tel. + 49 911 395-3056,

The GfK Group

The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in the three business sectors Custom Research, Retail and Technology and Media. The No. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2008, the GfK Group’s sales amounted to EUR 1.2 billion. For further information, visit our website: Follow us on Twitter:
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