GfK Report: Germany’s Consumer Confidence Sees Modest Rebound, But Economic Fears Persist

GfK Report: Germany’s Consumer Confidence Sees Modest Rebound, But Economic Fears Persist

(IN BRIEF) Germany’s consumer sentiment showed a slight improvement in September 2024, according to the latest GfK report. After a significant drop the previous month, income expectations and willingness to buy have increased, resulting in a modest rise in the consumer climate forecast for October, moving up by 0.7 points to -21.2. However, growing concerns over job security, higher unemployment, and rising corporate insolvencies are dampening optimism, with economic expectations declining for the second month in a row. Despite stabilizing inflation and wage increases, uncertainties around inflation, geopolitical crises, and the labor market continue to weigh heavily on consumers, preventing a more substantial recovery in sentiment.

(PRESS RELEASE) NUREMBERG, 26-Sep-2024 — /EuropaWire/ — Germany’s consumer sentiment saw a modest improvement in September 2024 after experiencing a significant decline in the previous month. Both income expectations and purchasing intentions have risen, leading to a minor increase in the consumer climate forecast for October. The indicator climbed 0.7 points to -21.2, up from a revised -21.9 in the previous month. However, the upturn is limited by a renewed rise in savings propensity. Germans’ outlook on the general economy over the next 12 months remains slightly more negative than in the prior month, according to the latest findings from the GfK Consumer Climate powered by NIM, published by GfK and the Nuremberg Institute for Market Decisions (NIM) since October 2023.

The overall consumer climate has been supported primarily by improved income expectations and a slightly less pessimistic willingness to buy. Yet, the consumer recovery remains constrained due to the savings inclination, which rose by 1.3 points in September, dampening the potential for a stronger rebound.

“Following the sharp downturn in the previous month, this slight uptick reflects a stabilization at a low level rather than the beginning of a meaningful recovery,” explained Rolf Bürkl, a consumer expert at NIM. “Since June 2024, the consumer climate has remained around -21 points, showing no significant improvement. The sentiment remains too unstable to suggest a marked rebound. In addition to ongoing negative influences like wars, inflation, and global crises, labor market uncertainties have recently emerged as a key factor.”

Rising Unemployment Concerns Weigh on Economic Outlook

Worries about unemployment have dampened economic expectations this month, despite the slight overall improvement in consumer sentiment. The economic outlook indicator fell by 1.3 points, landing at 0.7, mirroring the level seen in April 2024. This signals a prolonged stagnation in public sentiment regarding Germany’s economic prospects for the next 12 months.

In line with this, the ifo Institute’s latest forecast predicts that Germany’s GDP is expected to contract slightly, with a projected decline of 0.1 percent by the end of 2024, further underscoring the stagnation in economic sentiment.

Income Expectations Show Recovery After Previous Setback

While economic expectations have dimmed, German consumers’ income outlook has rebounded following a significant dip in August. The income expectations indicator increased by 6.6 points to reach 10.1 points, although it has only regained a portion of the steep 16-point loss from the previous month.

Despite increased purchasing power for many households, driven by stable inflation and rising wages, job security concerns continue to overshadow these gains, tempering consumer confidence.

Willingness to Spend Rises Amid Improved Income Prospects

Improved income expectations have boosted Germans’ willingness to spend. The indicator rose by 4 points, standing at -6.9, its highest level since March 2022 when it was -2.1 points.

Nevertheless, the overall willingness to purchase remains subdued, as consumers remain cautious due to ongoing inflation, geopolitical uncertainties, and concerns over job security.

About our methods

The survey period for the current analysis was September 5 to September 16, 2023. The results are extracted from the “GfK Consumer Climate powered by NIM” study and are based on around 2,000 consumer interviews per month conducted on behalf of the European Commission. The report presents the indicators in the form of graphics accompanied by brief comments. Consumer sentiment refers explicitly to all private consumer spending. Depending on the definition used, however, retail accounts for only around 30 percent of private consumer spending. Services, travel, housing costs, healthcare services, and the wellness sector as a whole account for the rest. Again, this does not apply to retail sales, but instead to total consumer spending. Like all other indicators, propensity to buy is a confidence indicator. It indicates whether consumers currently consider it advisable to make larger purchases. Even if they answer “Yes” to this question, there are two further requirements for making a purchase: The consumer must have both money required for such a large purchase and must also see a need to make this purchase. Furthermore, this only concerns durable consumer goods that also require a larger budget.

GfK Consumer Climate powered by NIM

The GfK Consumer Climate survey, which has been carried out monthly since 1980, is regarded as an important indicator of German consumer behavior and a guiding light for Germany’s economic development. Since October 2023, the Consumer Climate data collected by GfK has been analyzed and published jointly with the Nuremberg Institute for Market Decisions (NIM), the founder of GfK. By joining forces, it will be possible to invest further in the analysis and development of the Consumer Climate study to gain an even better understanding of the background to changes in consumer confidence.

GfK – an NielsenIQ company

For 90 years, clients around the world have trusted us to provide data-driven answers to key questions for their decision-making processes. We support their growth through our comprehensive understanding of buying behavior and the dynamics that influence markets, brands, and media trends. In 2023, industry leaders GfK and NielsenIQ have merged to offer their clients unparalleled global reach. With a holistic view of retail and the most comprehensive consumer insights, provided by forward-looking analytics on state-of-the-art platforms, GfK is driving “Growth from Knowledge.”

More information is available at www.gfk.com.

Nuremberg Institute for Market Decisions

The Nuremberg Institute for Market Decisions (NIM) is a non-profit research institute at the interface of academia and practice. NIM examines how consumer decisions change due to new technology, societal trends or the application of behavioral science, and what the resulting micro- and macroeconomic impacts are for the market and for society as a whole. A better understanding of consumer decisions and their impacts helps society, businesses, politics, and consumers make better decisions with regard to “prosperity for all” in the sense of the social-ecological market system.

The Nuremberg Institute for Market Decisions is the founder of GfK.
Further information is available at www.nim.org and LinkedIn.

Media Contact:

GfK:
Eva Böhm
Tel: +49 911 395 4440
public.relations@smb.nielseniq.com

NIM:
Sandra Lades
Tel: +49 911 95151 989
sandra.lades@nim.org

SOURCE: GfK