Home Forex Market News German Consumer Confidence To Fall In October: GfK

German Consumer Confidence To Fall In October: GfK

German consumer sentiment is set to deteriorate in October on continued tensions regarding the geopolitical situation, a survey by market research group GfK, based on responses from 2,000 households, revealed Friday.

The forward-looking consumer confidence index dropped to 8.3 in October from 8.6 in September. It was forecast to drop marginally to 8.5.

This was the second consecutive decline in the indicator, but it continues to be at a good level, the research group said.

The economic outlook for Germany once again worsened in September, with the economic expectations sub-index dropping to 4.4 from 10.4 in August.

Consumers assessed that economic weakness in a number of euro area nations as well as ongoing geopolitical situation are likely to have a greater impact on the German economy.

After a 0.2 percent economic contraction, stagnation, or in the best case, a slight improvement is expected in the third quarter, the GfK said.

The Organization for Economic Cooperation and Development last week projected that the German economy would grow by 1.5 percent in both 2014 and 2015. It urged the European Central Bank to take more measures including quantitative easing.

Companies are no longer confident of economic growth in the second half of this year. The Ifo survey showed that business confidence declined in September to the lowest level since 2013.

Consumers’ income expectations also decreased for the second month in a row in the wake of falling economic expectations.

The income expectations index dropped 6.7 to 43.4 in September. Nonetheless, it is significantly above the comparable figure in the previous year and clearly above-average.

Moreover, the high level of the indicator is a reflection on the good general conditions in Germany though the current weak economic situation had a slight negative impact on income expectations, GfK said.

The declining economic and income expectations have had a widespread impact on willingness to buy. The indicator for willingness to buy fell by 6.8 points to 42.5 points in September.

Still consumers appear to be in a buying mood, GfK noted. Recent improvement in household real income in conjunction with a low interest rate, consumers are likely to spend rather than save money, the research group said.

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