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29.08.2003 – 10:00


GfK Group: While consumer expectations improve, the propensity to buy remains unchanged
Findings of the GfK consumer climate survey, August 2003

    Nuremberg, Germany (ots)

While German companies (ifo) and analysts (ZEW) are confident about the future, expectations and the climate among German consumers still vary widely. Although consumer expectations with regard to the economy are improving, there has been no change in their propensity to buy. At the same time, income expectations are falling once again.               Economic outlook continues to improve          In August, as in previous months, consumers were once again hopeful with regard to the economic development. They obviously believe that slowly but surely the German economy is recovering from the recent low. For the third time in a row, the economic outlook indicator rose by 3.5 point to -9.2 points at present. This reflects the fact that fears of a recession are abating. It can be assumed that the optimism with regard to the economic outlook is based on the belief that there will soon be a recovery rather than the actual current economic conditions.               Income expectations: first signs of decline for a long time          Consumers are far more cautious when it comes to their own income expectations than the economy as a whole. The relevant indicator fell by 3.3 point to -5.9 points, which put an end to hopes that the income expectations indicator would reach the zero mark in August, returning to the average value of many years after a 10-month period below zero.               Propensity to buy still low          There is no movement to speak of in terms of consumers' propensity to buy. Although the relevant indicator increased by 0.7 per cent in August, the current figure of -33.2 points reflects that consumers are still feeling very insecure as to how much they should be spending.          Neither the current economic situation nor the development of the labour market are currently producing any substantially positive effects that may stop the decrease in the propensity to buy, which has lasted for almost two years. The high level of unemployment in particular, which continued to increase, is hindering any perceptible improvement in the propensity to buy.          The excitement of having more disposable income as a result of the tax reforms has clearly given way to fears of having to pay at least as much in tax as before, or possibly even more. The fact that retired people will need to wait until next year for their benefits to be adjusted in order to relieve the pressure on the state pension fund is not exactly cheering news either.               Conclusion: consumer climate stable, but lacking dynamic development          The continued stabilization of the consumer climate with a slight upward trend, which is calculated by extrapolating several indicators, is mainly due to the positive economic outlook. Based on the overall indicator, the forecast for September is 4.8 points (after 4.6 points in August). This increases the probability of consumption stabilizing further in the course of this year, however, it is unlikely that the dynamic development hoped for will materialize. A fundamental recovery of the consumer climate requires a tangible, positive development in the labour market. More certainty with regard to income and, as a result, the ability to plan ahead would also help to accelerate recovery of the consumer climate.          More:      ots Original Text Service: GfK Group Internet:      Contact: Ulrike Schoenberg phone +49 (0)911 395 2645

Original content of: GfK SE, transmitted by news aktuell

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