| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Index | -26.8 | -28.1 | -26.5 | -26.7 |
Highlights
The October survey revised slightly steeper the decline in confidence at the start of the current quarter and forecasts a further drop next month. The climate indicator in October was trimmed from minus 26.5 to minus 26.7 and in November is expected to worsen to minus 28.1, which would be its third successive fall and the weakest print since April. It was also on the soft side of the market consensus.
Income expectations in October dropped 4 points to minus 15.3, but were still more than 43 points higher than a year ago. Economic expectations shed a point to minus 2.4 and are now 19.8 points firmer than in the same month in 2022. Lastly, the propensity to buy was essentially flat at minus 16.3, just 0.1 point below the September level and 1.2 points stronger than a year ago.
The latest data do nothing to suggest that the downswing in household spending will come to an end any time soon. Talk of recession is getting louder and consumer sentiment is responding accordingly. However, with the German RPI at minus 1 and the RPI-P at 8, economic activity in general is at least performing much as expected.
Income expectations in October dropped 4 points to minus 15.3, but were still more than 43 points higher than a year ago. Economic expectations shed a point to minus 2.4 and are now 19.8 points firmer than in the same month in 2022. Lastly, the propensity to buy was essentially flat at minus 16.3, just 0.1 point below the September level and 1.2 points stronger than a year ago.
The latest data do nothing to suggest that the downswing in household spending will come to an end any time soon. Talk of recession is getting louder and consumer sentiment is responding accordingly. However, with the German RPI at minus 1 and the RPI-P at 8, economic activity in general is at least performing much as expected.
Market Consensus Before Announcement
Consumer climate is expected to edge lower to minus 26.8 in November's report after minus 26.5 October. This reading has been steady at historically weak levels.
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.
