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German Consumer Morale Slips Heading Into May

Published on Apr 26 2018 8:28 AM in Retail tagged: Germany / Consumer Sentiment / GfK

German Consumer Morale Slips Heading Into May

The mood among German consumers fell heading into May, a survey showed on Thursday, amid fears that a possible confrontation between the West and Russia in Syria and protectionist U.S. trade policies could hurt the economy.

The consumer sentiment indicator, published by the GfK institute and based on a survey of around 2,000 Germans, fell to 10.8 going into May from 10.9 a month earlier. The reading was in line with forecasts from a Reuters poll.

"The escalation of the Syrian crisis and the protectionist trade policies of the United States are worrying consumers and could now also affect Germany's previously excellent economic prospects," GfK researcher Rolf Buerkl said in a statement.

"This development has also been exacerbated by major fluctuations in the stock markets, which also indicate an emerging insecurity among market participants and more turbulent times ahead," Buerkl said.

Both economic and income expectations fell, the survey showed. But propensity to buy rose to a three-month high, good news for an economy that has depended on consumption for growth.

The economy has grown for the past nine years. Low interest rates, record-high employment and rising real wages are all supporting consumption.

"Consumer mood is still very high. Consumers are still willing to open their wallets and spend. Firstly, there is little fear of job losses due to the excellent employment situation," Buerkl said.

"This supports planning security, which should primarily lead to greater spending, particularly because the period of low interest rates in the euro area will continue, making saving an unattractive alternative. Moderate price development will also support consumer mood."

The dip in the mood among consumers is shared by other sentiment surveys. Both the Ifo institute's business morale indicator and the ZEW investor sentiment survey fell this month on weaker economic data in the first quarter.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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