German GfK Consumer Sentiment To Drop In July

Germany’s consumer sentiment is set to weaken in July as income expectations suffer significant setbacks amid fears of job losses among shoppers, survey data from market research group GfK showed Wednesday.

The forward-looking consumer sentiment index dropped more-than-expected to 9.8 in July from 10.1 in June. The score was forecast to fall marginally to 10.0.

Among components, propensity to buy increased again and economic expectations ceased their downward spiral in June. Meanwhile, income expectations declined noticeably.
The economic expectations index rose 0.7 points to 2.4 in June.

The economic mood is stabilizing at a low level as the global economic cooling off, on-going discussions around Brexit, and the trade war with the USA are putting a strain on the economic indicator.

These factors have weighed on exports and growth predictions for the largest euro area economy have weakened. GfK noted.

The income expectations index slid 12.2 points to 45.5 in June. This was the lowest score since March 2017. The decline reflects fears concerning rising job losses, especially in automotive industry.

On the other hand, the propensity to buy indicator rose 3.2 points to 53.7.

If the significant loss suffered by income expectations in June turns into a persistent downward trend, then it will be tough for propensity to buy to maintain its current level.

According to GfK, domestic demand will remain an important pillar of the economy. However, uncertainty around job security as a result of the trade conflicts should be combated as quickly as possible, the market research group said.

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