Job concerns weigh on German consumer sentiment in September, finds GfK

BERLIN (Reuters) – German consumer sentiment is set to tumble going into September as slightly rising unemployment, job cuts and insolvency’s drive down income expectations, pushing back hopes of a stable economic recovery, a survey showed on Tuesday.

The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), fell to -22.0 points going into September from a slightly revised -18.6 the month prior and below a forecast for -18.2.

A tumble in income expectations brought down overall sentiment, falling to 3.5 points from 19.7, as an increase in purchasing power felt by many households was not enough to compensate for their rising labour market uncertainty.

The recovery seen in August was only a blip due to the European Championship, said NIM consumer analyst Rolf Buerkl.

“Slightly rising unemployment figures, an increase in company insolvencies and staff reduction plans at various companies in Germany are causing a number of employees to worry about their jobs,” said Buerkl, pushing back hopes for a sustainable economic recovery driven by private consumption.

Unemployment rose more sharply than usual at the start of summer break, while economic institutes have predicted a rise in corporate insolvencies. There have also been a string of recent job cuts announced at firms such as Deutsche Bahn, Bayer and ZF Friedrichshafen.

SEP 2024 AUG 2024 SEP 2023

Consumer climate -22.0 -18.6 -25.6

Consumer climate components AUG 2024 JUL 2024 AUG 2023

– willingness to buy -10.9 -8.4 -17.0

– income expectations 3.5 19.7 -11.5

– business cycle expectations 2.0 9.8 -6.2

NOTE – The survey period was from Aug. 1-12, 2024.

The consumer climate indicator forecasts the progress of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects respondents’ assessment of the general economic situation over the next 12 months.

(Reporting by Miranda Murray; Editing by Ludwig Burger)