Consumer confidence in Germany continues its downward spiral, fueled by a significant deterioration in consumer income expectations revealed in the latest GfK Consumer Climate report released this week. While a slight uptick in both economic expectations and willingness to purchase provides a marginal counterweight, prevailing anxieties surrounding job security and the persistent cost-of-living crisis are undermining any nascent signs of recovery.
The November 2024 Consumer Climate indicator is now projected at -24.1 points, a decrease of 1.6 points from the downwardly revised October figure of -22.5. The erosion of income expectations is the primary driver for this continued decline. October saw income expectation drop by nearly 13 points, plummeting to 2.3 points – the lowest level since March and a significant reversal of the 11-point gain observed the previous month. Rolf Bürkl, Head of Consumer Climate at the Nuremberg Institute for Market Decisions (NIM), attributed this to “the persistently strained geopolitical situation, renewed inflationary fears and growing worries about employment.
The marginal increase in willingness to buy at -9.3 points offers little solace, remaining deeply entrenched in negative territory. The continued pressure of elevated food and energy prices are clearly contributing to consumer hesitancy, forcing households to curtail discretionary spending. Notably, the increase is insufficient to offset the broader pessimistic outlook.
Even the slight recovery in consumer economic expectations – gaining 2.2 points to reach 0.8 points after three consecutive months of decline – fails to inspire significant optimism. This improvement, while welcome, suggests only a plateauing, not a genuine rebound. The overall message is one of cautious realism; experts anticipate continued sluggish growth, with the German economy projected to expand by just one percent in 2025 following an expected stagnation this year.
The continued fragility of consumer sentiment highlights the precariousness of Germany’s economic outlook and raises concerns about the government’s ability to stimulate robust demand, particularly given ongoing uncertainties surrounding global trade and geopolitical stability. The data underscores the urgent need for targeted policy interventions to address income insecurity and restore consumer confidence, lest the downward trend becomes deeply entrenched.
