German Consumer Climate Improves in November

Overall, German consumers’ mood continued to stabilize in November. The consumer climate is improving as the year draws to a close. Following a value of 8.5 points in November, the overall indicator is forecasting 8.7 points for December. Income expectations and willingness to buy increased for the second consecutive month, while a marginal decline was recorded for economic expectations.

There is greater uncertainty among German consumers as a result of the persistently tense geopolitical situation coupled with the economic slowdown in the eurozone. This is reflected in the deteriorating economic outlook. However, consumers’ income outlook and spending propensity have not yet been affected by these developments. Both indicators once again recorded a second consecutive improvement on their already extremely high level.

Economic expectations: continue to deteriorate

Counter to the hope still held last month, the economic outlook of German consumers did not continue to stabilize. Economic expectations dropped by 2.7 points and now stand at 1.6 points. The indicator is therefore still slightly above the long-term average of zero points. A lower value was last recorded in June 2013, when it fell to 1.1 points.

The German economy is now also beginning to suffer the effects of the various international crises in Iraq, Syria and Ukraine as well as the Ebola epidemic in West Africa and, linked to this, the economic weakness in the eurozone. Consequently, a significant downward correction of the growth forecast for German gross domestic product (GDP) was required in recent weeks. In line with the German government, the German Council of Economic Experts also lowered its prediction for economic growth this year to just 1.2 percent in its recently published Annual Economic Report. Just over a year ago, the German Council of Economic Experts had still been forecasting 1.9 percent. The German economy is currently stagnating and economic experts are only anticipating it to recover over the course of next year. Accordingly, the estimate for next year’s growth prospects is also very conservative, at 1.0 percent.

via GFK

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza