Boom still not foreseeable
Consumer climate continues to brighten
01/24/2023 10:24 am
Energy prices are falling – consumer sentiment is rising. According to the market research company GfK, consumer sentiment in Germany has improved for the fourth time in a row. Even if the level is low, the pessimism has subsided.
Germans are in a buying mood for the fourth month in a row as inflation falls and fears of a recession recede. For February, the GfK market researchers forecast an increase in their consumption barometer by 3.7 to minus 33.9 points – the highest value in six months. “Even if the level is still very low, pessimism has subsided recently,” commented GfK consumer expert Rolf Bürkl on the development. “Falling prices for energy, such as petrol and heating oil, have ensured that consumer sentiment is less gloomy.”
The inflation rate has recently fallen twice in a row – to currently 8.6 percent. “In the valley of tears, the mood is at least climbing a hill,” commented the chief economist at Hauck Aufhäuser Lampe Privatbank, Alexander Krüger, on the upward trend. Apparently, government measures to cushion the exploding energy costs would also contribute to this. “It’s amazing that there hasn’t been a slump in consumption despite the creepy consumer mood,” said Krüger.
However, the GfK experts are not expecting a consumption boom this year. “Private consumption will not be able to make any positive contribution to overall economic development this year,” said Bürkl. This is also indicated by the still very low level of the indicator. The year 2023 should “remain difficult” for the domestic economy.
The approximately 2,000 consumers surveyed also assessed their income prospects more optimistically for the fourth month in a row: This sub-indicator climbed by 11.2 to minus 32.2 points and is increasingly leaving its record low of September 2022 behind. In addition to the more moderate development of energy prices in recent weeks, the relief packages from the federal government to curb energy costs are also likely to have supported income sentiment: “Consumers are therefore assuming that the real income losses will not be as drastic as was feared a few weeks ago .”
Willingness to make major purchases is still low
Consumers have rated the economic outlook better for the third month in a row: this indicator gained 9.7 points and is now at minus 0.6 points. This means that economic sentiment has almost reached its long-term average, which is around zero points. “Consumers are apparently increasingly gaining the impression that the recession into which many experts believe the German economy is likely to slide this year will be less severe than feared a few weeks ago, and that it may even be avoided altogether,” she said GfK researcher.
The willingness to make larger purchases – such as cars and furniture – cannot benefit from this. On the contrary: the barometer for the propensity to buy completely lost the gains from the previous month and lost 2.4 points to minus 18.7 points. “Uncertainty is still very pronounced in view of the multiple crises, such as the pandemic, the Ukraine war and inflation,” according to the GfK experts. A significant part of this uncertainty apparently stems from the fact that many households are expecting significantly higher amounts for their heating bills in the coming months. “They are already putting money aside for this,” it said. “This is of course missing at the moment for other editions.”