FX.co ★ German GfK Consumer Sentiment To Deteriorate Sharply

German consumer confidence is anticipated to sharply decline as the year draws to a close, driven by plummeting income expectations which have reached a nine-month low amid escalating recession fears, according to a survey released on Wednesday.

The survey, conducted collaboratively by GfK and the Nuremberg Institute for Market Decisions, reveals that the consumer sentiment index has fallen to -23.3 for December, down from a revised -18.4 in November.

This December index represents the lowest point since May of this year, mirroring sentiment levels seen at the close of 2023. According to Rolf Bürkl, an expert at the Nuremberg Institute for Markets, there has been a recent increase in consumer uncertainty, evidenced by a rising willingness to save. Additional factors contributing to this uncertainty include concerns about job security, stemming from reported industrial job cuts and the offshoring of production facilities.

Income expectations have notably decreased, and the propensity to spend has slightly waned. For the fourth month in a row, consumers have become increasingly pessimistic about the broader economic outlook.

The rise in insolvencies and news of potential job losses have further dampened economic expectations, causing the economic expectations index to fall to -3.6 in November after a decline of 3.8 points, marking the fourth consecutive month of downturn.

Meanwhile, the income expectations index plummeted by 17.2 points to reach -3.5 in November, with a more severe drop not seen in the past nine months.

Consumer willingness to buy has experienced a slight decline, remaining at an exceptionally low level, as indicated by the corresponding index which fell by 1.3 points to -6.