Mixed feelings among German consumers

In the course of their current consumption climate study, the Gesellschaft für Konsumforschung (GfK) found out that the feelings of German consumers are mixed at the beginning of this year. While the indicators with regard to economic prospects and propensity to buy were increasing, the indicator for income prospects was falling in comparison with the previous month. The overall indicator for consumption climate predicted for February is 4.5 points which is the same value as in January this year.

After a seven-months downward development the indicator for economic prospects increased in January 2008. It increased by about 5 points and currently stands at 28.7 points. This increase is in particular due to a positive development on the German labour market. Prerequisite for this to continue, however, is the current crisis on the financial markets not spreading to Germany.
In constrast to the indicator for economic prospects the German consumers assess their future financial situation with less optimism. After this respective indicator had lost 2 points in the previous month, it fell by 3 points in January. Thus, the income indicator now stands at -4.7 points. For several months now Germany have been worried by inflation which is on the top of the agenda.

As was already the case in December last year, the propensity to buy indicator also increased in January. It increased by 1.9 points and currently stands at -8.8 points which is 3.7 points below the value of January 2007. In order for this positive development to consolidate it is necessary that external influences such as increasing prices, not not exceed a certain limit.
The following table shows the development of the several indicators:

  Jan 2008 Dec 2007 Jan 2007
economic climate 28.7 23.6 37.5
income expectation -4.7 -1.7 -5.1
propensity to buy -8.8 -10.7 -5.1
consumer climate 4.5 4.4 8.5

Given that in January 2008 the opposite developments of the indicators of income expectations and propensity to buy almost neutralize each other, the consumer climate indicators remains unchanged. For February the same consumer climate indicator (4.5 points) as for January is forecast. GERMAN