German consumer sentiment slipped for the first time in six months amid concerns over the international context and evolution of global markets, GfK announced August 21.
GfK researchers used questionnaires on more than 2,000 German adults and learned that the consumer marker fell to 9.9 in the last 10 months, meaning that this is the weaker reading since March.
Moreover, analysts expected at least a 10.1 reading for this period, yet GfK investigators believe that Germans expect their economy to rebound by the end of this year.
“Despite the decline, it cannot be said that the economic motor will stutter or even stall,” noted Rolf Buerkle, one o the Gfk Investigators.
Buerkle underscored that the reading is relatively high, so Germany should rest assured that private consumption would further help its economy reach a superior level this year. Buerkle also predicted that the economic conditions favorable to a rebound would “remain favorable.” As a result, consumer sentiment would improve even more by the end of the year.
Between April and June, the country’s economy experienced an uptick of 0.4 percent from the 0.3 gain from the first quarter. Experts explain that the positive results are due to a boost in foreign trade and internal investments.
On the other hand, the country’s GDP fell short of expectations, as well, since it recorded a third consecutive loss. It is not stabilized to 16.6 but remains higher than last year’s results.
GfK analysts argued that consumer sentiment slipped in Germany because of the recent events recorded in China. Germans are concerned that China and other developing countries may drag down their country, which heavily relies on foreign trade.
A lack of trust of German consumers was also reflected by the “willingness to buy” indicator which is still on a descending trend fro the third consecutive month. This means that Germans were less willing to invest in expensive products such as personal computers or furniture.
Buerkle also said that the labor market may soon improve the reading because high level of employment and expectations for better incomes as higher wages are looming provide grounds for optimism. Reserachers base their assumptions on the income expectations indicator which reflects how people see their income’s development in the next 12 months.
GfK experts explained that the indicator is an ratio between yes and no answers to the question whether consumers think that the current economic situation encourages them to buy a major item.
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