| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Index | -25.0 | -24.4 | -25.4 | -25.2 |
Highlights
The July survey confirmed a deterioration in confidence at the start of the quarter but expects this to be made back in August. From a slightly stronger revised minus 25.2 in July, the climate indicator is forecast to climb to minus 24.4, beating the market consensus by 0.6 points.
Income expectations rose from minus 10.6 in June to minus 5.1 this month, their best reading since the start of the war in Ukraine and fully 40.6 points higher than a year ago. Linked to this, the propensity to buy was also firmer, albeit just 0.3 points at minus 14.3. Compared with a year ago, this sub-index was up only 0.2 points and stagnation here continues to reflect worries about sharply rising prices and higher interest rates. More generally, economic expectations were only stable on the month at minus 3.7 but nearly 22 points stronger than in July 2022.
In sum, household confidence remains historically weak and warns that consumer spending is unlikely to provide much of a boost to GDP growth in the third quarter. The German ECDI now stands at minus 16 and the ECDI-P at minus 26, indicating that overall economic activity is still falling short of market expectations.
Income expectations rose from minus 10.6 in June to minus 5.1 this month, their best reading since the start of the war in Ukraine and fully 40.6 points higher than a year ago. Linked to this, the propensity to buy was also firmer, albeit just 0.3 points at minus 14.3. Compared with a year ago, this sub-index was up only 0.2 points and stagnation here continues to reflect worries about sharply rising prices and higher interest rates. More generally, economic expectations were only stable on the month at minus 3.7 but nearly 22 points stronger than in July 2022.
In sum, household confidence remains historically weak and warns that consumer spending is unlikely to provide much of a boost to GDP growth in the third quarter. The German ECDI now stands at minus 16 and the ECDI-P at minus 26, indicating that overall economic activity is still falling short of market expectations.
Market Consensus Before Announcement
Consumer climate is expected to slip to minus 25.0 in August's report after unexpectedly stalling at minus 25.4 in July which was down a full point to end eight straight gains.
Definition
GfK's consumer climate survey asks around 2,000 German consumers every month about their assessment of economic conditions. The questions focus on economic and income expectations and consumers' willingness to buy. Having calculated the differences between the positive and negative responses for each question the results are synthesized into a single number that reflects overall consumer expectations for the coming month.
Description
Any insight into household expenditure is vital to understanding how the economy as a whole is shaping up. The monthly correlation between the GfK consumer gauge and actual spending is not especially high but trends in the index can offer useful information about potential underlying developments in consumer behavior. As a forward looking indicator, the GfK index is one input used by analysts in the construction of their forecasts of future German retail sales.
