Findings of the GfK Consumer Climate study for Germany for May 2015

Nuremberg, May 27, 2015 - Developments in the consumer mood in Germany have not been uniform again in May. The German consumer climate is increasing slightly. Following a value of 10.1 points in May 2015, the overall indicator is forecasting 10.2 points for June. Economic expectations and willingness to buy increased somewhat, while the income expectations declined moderately.

Very robust domestic demand in Germany and low inflation rates have caused economic expectations and willingness to buy to further improve again. In April, both indicators had to accept further losses. In contrast, the income expectations were not able to completely maintain the highest value since the reunification, which was reached in the previous month.

Economic expectations: trending upwards again

The economic expectations of consumers have recovered again. After the indicator took a little breather in the previous month, it gained ground in May. The indictor climbed by 3 points to a current value of 38.3 points.

Evidently consumers are currently primarily seeing the extremely robust domestic demand trend when assessing Germany's economic situation, particularly private consumption. The economy as a whole has noticeably lost momentum in the first quarter of this year. According to preliminary data from the Federal Statistical Office, the gross domestic product only increased by 0.3 percent in the first three months of 2015 in comparison to the previous period. It was still 0.7 percent in the last quarter of the previous year. Foreign trade in particular has apparently dampened growth in the first quarter. Reports from the Federal Statistical Office also provide insight. They indicate that both industrial production and new orders from abroad declined in March. According to the ifo business index, enterprises themselves are very satisfied with the current business situation, yet somewhat more skeptical for the upcoming months as they had been so far.

Continuing tough negotiations between Greece and the EU to determine if further financial assistance will be paid in order to avoid bankruptcy for the southern country still do not seem to have a lasting impact on consumers.

Income expectations cannot quite maintain peak value

In contrast to economic expectations, income expectations had to accept a slight loss in May. The indicator lost 3.1 points and now stands at 52.0 points. Consequently, the indicator could not quite maintain the highest value since the reunification, which was achieved in the previous month. However, the level is still very good.

Consumer inflation expectations, which rose again, are possibly a reason for their slightly diminished income optimism. Energy prices, for example, have increased noticeably again since the beginning of the year. This also applies to the consumer price signal, the price of gasoline. Experience shows that the general price expectation depends on the price development at the pumps to a large extent.

Willingness to buy increases again after a short pause

Willingness to buy almost completely made up for the loss in the previous month. The indicator gained 4.3 points and now stands at 62.6 points. It remains slightly under its historic peak value of 64.4 points in October 2006. The trend is still upward.

Continuing good employment, good income growth, and low inflation provide sustained support for the willingness to buy. Retail trade especially can clearly profit from the currently extremely high willingness to buy. According to the data from the Federal Statistical Office, real retail sales increased by 3.6 percent in the first three months of this year as a result.

Consumer climate increases slightly

Following a value of 10.1 points in May, the overall indicator is forecasting 10.2 points for June. This is the highest value since October 2001. At that time, the value stood at 11.0 points. This continues the moderate upward trend for the German consumer climate.

Private spending is a key driver for economic growth this year. However, existing risks still must not be forgotten. Tough negotiations on the future of Greece in the euro area, the Ukraine crisis, and IS terrorism could noticeably dampen consumption in Germany.

About the study

These findings are extracts from the "GfK Consumer Climate MAXX survey", which is based on around 2,000 consumer interviews conducted each month on behalf of the European Commission. The report contains charts, forecasts and a detailed commentary regarding the indicators. In addition, the report includes information on proposed consumer spending in 20 different areas of the consumer goods and services markets. The GfK Consumer Climate survey has been conducted since 1980.

The consumer climate explicitly refers to all private consumer spending. However, depending on the definition, only 30 percent of private consumer spending is attributable to retail. The remainder is attributable to services, travel, rent, health services and the entire personal care segment.

GfK is predicting a rise in private consumption of 1.5 percent for 2015. Again, this does not relate to just retail sales, but to all consumer spending. Last year, GfK also forecast that private spending would increase by 1.5 percent. According to figures from the Federal Statistical Office, private spending grew by 1.2 percent in 2014 in real terms.

Willingness to buy is a mood indicator, as are all the other indicators. It examines whether consumers think it is advisable to make major purchases at present. Even if they answer "yes", two further requirements need to be fulfilled for a purchase to be made: consumers must have the money that is required for such a major purchase and also regard this acquisition to be necessary. In addition, it only relates to consumer durables, which require a greater budget.

The findings of the consumer climate survey are based on around 2,000 interviews conducted each month on a representative sample of the German population. This survey tool is subject to continuous quality controls, especially in relation to the representativeness. The fact that the results are used and recognized in the field of empirical legal research (for example, the likelihood of confusion between products) is a testament to the exceptionally high quality of this survey. This means that the results are quality-approved by experts and must stand up in court.

Further information: Rolf Bürkl, Tel. +49 911 395-3056

About GfK

GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK's long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers' experiences and choices.

For more information, please visit www.gfk.com. or follow GfK on Twitter: www.twitter.com/gfk_en

Responsible under press legislation:
GfK SE, Corporate Communications
Jan Saeger
Nordwestring 101
90419 Nürnberg
T



Download

distributed by