German consumer sentiment held steady in July in spite of growing fears associated with international trade conflicts, according to a monthly consumer sentiment barometer published on Thursday by the market research institute GfK.
The closely-watched GfK consumer index declined by 0.1 point to 10.6 points in July. The findings are based on a regular survey of around 2,000 respondents which has been conducted by the Nuremberg-based institute since 1980.
Although only constituting a relatively modest fall, GfK expert Rolf Buerkl argued that the latest development of the barometer suggested that consumers increasingly expected Germany's economic momentum to weaken in the remainder of 2018.
However, a healthy national labor market meant that German consumers anticipated further wage rises and were hence also willing to commit to bigger purchases in spite of weaker overall growth.
"The consumer sentiment and income expectations of citizens are based on the excellent framework conditions which we still have in Germany," Buerkl said. These conditions included low unemployment, low interest rates, moderate inflation and rising pensions.
In the months ahead, the GfK study pointed to a further uptick in inflation as posing a potential threat to consumer sentiment. The growth of annual consumer prices has recently inched above the official target of close to, but below, two percent set by the European Central Bank (ECB).
"If this trend were to solidify it would have negative implications for consumption," a statement by the GfK read.
Additionally, serious risks continued to stem from a potential escalation of the ongoing trade conflict between the European Union (EU) and the United States. A fall in German exports would increase fears of job losses in affected industries and thus depress household spending.
According to Buerkl, deterioration in the commercial fortunes of the important automotive industry in Germany could have a "signaling function" for the wider economy.
The closely-watched GfK consumer index declined by 0.1 point to 10.6 points in July. The findings are based on a regular survey of around 2,000 respondents which has been conducted by the Nuremberg-based institute since 1980.
Although only constituting a relatively modest fall, GfK expert Rolf Buerkl argued that the latest development of the barometer suggested that consumers increasingly expected Germany's economic momentum to weaken in the remainder of 2018.
However, a healthy national labor market meant that German consumers anticipated further wage rises and were hence also willing to commit to bigger purchases in spite of weaker overall growth.
"The consumer sentiment and income expectations of citizens are based on the excellent framework conditions which we still have in Germany," Buerkl said. These conditions included low unemployment, low interest rates, moderate inflation and rising pensions.
In the months ahead, the GfK study pointed to a further uptick in inflation as posing a potential threat to consumer sentiment. The growth of annual consumer prices has recently inched above the official target of close to, but below, two percent set by the European Central Bank (ECB).
"If this trend were to solidify it would have negative implications for consumption," a statement by the GfK read.
Additionally, serious risks continued to stem from a potential escalation of the ongoing trade conflict between the European Union (EU) and the United States. A fall in German exports would increase fears of job losses in affected industries and thus depress household spending.
According to Buerkl, deterioration in the commercial fortunes of the important automotive industry in Germany could have a "signaling function" for the wider economy.
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