German consumer sentiment on the mend ahead of Christmas

Consumers in Germany are optimistic as they head into the Christmas season, with the GfK market research institute on Tuesday expecting consumer sentiment to rise slightly next month.

Its consumer climate index is expected to increase to 9.7 points in December, after having fallen by 0.2 points in November to reach 9.6 points.

Any figure above zero indicates that more respondents are optimistic than are pessimistic. The results are based on surveys of about 2,000 consumers.

Consumers are much more positive about economic developments than just a month ago.

“The exceptionally high levels of consumer confidence among German consumers have significantly contributed to preventing a recession in Germany in the third quarter,” GfK consumer expert Rolf Buerkl said in a statement.

Rising by 15.5 points within one month, the indicator measuring consumers’ economic expectations has seen its biggest increase in more than nine years, according to GfK.

“This decline in pessimism is most likely due to the trade war between the United States and China showing tentative signs of easing,” the research institute said, noting also hope among Germans that the upcoming British elections will help pave the way for “a decision on Brexit.”

The more optimistic economic outlook helped improve people’s expectations about their own financial situation. The GfK indicator measuring income expectations almost completely reversed last month’s losses to reach 45.5 points.

The favourable employment situation and a drop in inflation also contributed to boosting these expectations, GfK said.

Consumers’ propensity to buy, meanwhile, fell slightly but “continues to enjoy a very high level,” according to the institute.

“The retail sector can certainly look forward to this [holiday] period with a healthy dose of optimism,” Buerkl said.

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