Consumer Climate: Downward trend stopped for now

Consumer sentiment in Germany remains overall stable in November, with no significant changes. Willingness to buy is growing slightly, while income expectations have experienced a slight decline. Economic expectations remain almost unchanged compared to the previous month. The forecast value for the Consumer Climate for December is at -27.8 points, and thus 0.5 points above November (revised to -28.3 points). These are the findings of the GfK Consumer Climate powered by NIM for November 2023. As of October 2023, it is published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM), the founder of GfK.

The slight increase in consumer sentiment results from the decrease in willingness to save this month from 8.5 to 5.3 points. “After three consecutive months of decline, consumer sentiment is stabilizing as the year draws to a close. It continues to be at a very low level and there are no signs of a sustainable recovery in the coming months,” explains Rolf Bürkl, consumer expert at NIM. “The mood is still characterized by uncertainty and concern.”

This uncertainty is particularly evident in the willingness to save. A recent in-depth analysis conducted by NIM underlines this: Consumers were specifically asked why they think it is the right moment to save. In an open survey, approximately one-third of participants stated that the current (geo-) political and economic situation makes them very uncertain. As a result, they are concerned and deem it best to save their money. In addition to the current conflicts such as the war in Ukraine and the Middle East, it is primarily the high inflation in Germany driving the willingness to save. This concern was cited by more than a third of those surveyed. 

“This empirically confirms that the willingness to save is less as an indicator of conscious financial investment and, instead, can be primarily interpreted as a signal of the extent of consumer uncertainty,” Rolf Bürkl continues. “However, conversely, this also means that sustainable recovery of the consumer sentiment requires bringing inflation back to a reasonable level and finding solutions for international crises.”


Inflation continues to put pressure on income expectations

Less sharp price increases will also have a positive effect on consumers’ purchasing power. The high rate of inflation is also an important reason that income expectations are viewed pessimistically. The income indicator is therefore at a remarkably low level, which decreased again in November by 1.4 points to -16.7 points. A lower value was last seen in March of this year at -24.3 points. It can be assumed that rising prices for food in particular will continue to put pressure on the purchasing power of the incomes of individuals. 


Willingness to buy remains at a very low level

In view of the slightly downward income expectations, it is no surprise that willingness to buy remains at rock bottom. While the indicator did show a meager 1.3 points of growth, it is still at a very low level at -15 points. The fact that a small gain of 3.6 points over the previous-year period has been recorded shows that willingness to buy is stagnant and that no signs of change in this trend are evident. The uncertainty from ongoing crises as well as high inflation create marked reluctance to buy.


Economic expectations nearly unchanged

The economic expectations of German consumers remained nearly unchanged in November. After a minimal increase of 0.1 points, the indicator is now at -2.3 points. The growth amounts to 15.6 points over the corresponding previous-year period. At the time, however, the economic outlook was severely affected by major fears of recession due to the looming scarcities in energy supply.

The current level of the indicator shows that German consumers do not anticipate a noticeable upswing in the economy in the foreseeable future. This also corresponds with the opinions of almost all economic and political experts: According to the recently published annual assessment of the German Council of Economic Experts, also referred to as the “Five Sages” the real GDP will decrease by 0.4 percent this year. For the coming year, a moderate growth of 0.7 percent is forecast.