Consumer sentiment in Germany is improving at the end of the year: Income expectations and the willingness to buy show noticeable growth. The economic expectations are also improving slightly. In the forecast for January, the Consumer Climate rises to -25.1 points – an improvement of 2.5 points compared to the previous month (revised to -27.6 points). These are the results of the GfK Consumer Climate powered by NIM for December 2023. As of October 2023, it is published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM), the founder of GfK.
These figures show that consumer sentiment is improving again after a recent period of stagnation. A slightly higher consumer sentiment was last measured in August of this year, at -24.6 points. "It remains to be seen whether the current increase represents the start of a sustained recovery in consumer sentiment," explains Rolf Bürkl, consumer expert at NIM. “Consumers still have major worries. Geopolitical crises and wars, sharply rising food prices and discussions around national budget for 2024 continue to cause uncertainty. As a result, the level of consumer sentiment is currently still very low."
For a lasting upturn in the mood of consuming, it is necessary to address the causes of uncertainty and find a solution here. In concrete terms, this means that further steps must be taken towards price stability and solutions must be found to the various crises.
Income expectations stop downward trend
The positive development of the consumer climate this month is primarily based on income expectations. In December the indicator increased by 9.8 points compared to the previous month, therefore climbing to -6.9 points. A better value was last measured in July 2023, at -5.1 points.
One of the main reasons for the increased income optimism is certainly the significant growth that is expected in the most important income source for private households: wages and salaries, or pensions.
A more in-depth analysis recently carried out by the NIM confirms this: German consumers were asked why they expect their financial situation to improve. In this open question, around one-third of the respondents answered that recent or future wage/salary and pension increases are the reason for this positive assessment. It was by far the most significant reason mentioned. A number of other reasons were also given, such as job security or career changes/improvements, for example professional education coming to an end. However, approximately one in ten respondents also mentioned reducing expenses in order to make savings.
Willingness to buy with first signs of recovery
As the income expectations improve, the willingness to buy is also noticeably increasing: After a stagnation phase of around one and a half years, the indicator gained 6.2 points and now stands at -8.8 points. The willingness to buy was last higher in March 2022, at -2.1 points.
Despite the significant increase, willingness to buy is currently still below the level during the two lockdowns of the 2020/2021 Covid-19 pandemic. This fact confirms the current level of uncertainty among consumers, caused by the multiple crises.
Economic expectations are improving slightly
Economic pessimism among consumers continued to decline at the end of the year. The indicator for the economic expectations rises to -0.4 points. That is 1.9 points higher than in the previous month. Compared with the corresponding period of the previous year, the increase is just under 10 points.
Despite the slight increase, consumers are still very cautious about further economic developments in Germany. This is in line with views from the economy which are increasingly pessimistic about the prospects for growth in 2024. The current economic forecast for the coming year from the German Economic Institute (IW) expects a decline in gross domestic product of 0.5 percent.
Planned publication dates 2024:
• Friday, January 26, 2024, 8 a.m.
• Tuesday, February 27, 2024, 8 a.m.
• Tuesday, March 26, 2024, 8 a.m.
• Thursday, April 25, 2024, 8 a.m.
• Wednesday, May 29, 2024, 8 a.m.
• Wednesday, June 26, 2024, 8 a.m.
• Wednesday, July 24, 2024, 8 a.m.
• Wednesday, August 28, 2024, 8 a.m.
• Thursday, September 26, 2024, 8 a.m.
• Tuesday, October 29, 2024, 8 a.m.
• Wednesday, November 27, 2024, 8 a.m.
• Thursday, December 19, 2024, 8 a.m.
About our methods
The survey period for the current analysis was November 30 to December 11, 2023. The results are extracted from the “GfK Consumer Climate powered by NIM” study and are based on around 2,000 consumer interviews per month conducted on behalf of the European Commission. The report presents the indicators in the form of graphics accompanied by brief comments. Consumer sentiment refers explicitly to all private consumer spending. Depending on the definition used, however, retail accounts for only around 30 percent of private consumer spending. Services, travel, housing costs, healthcare services, and the wellness sector as a whole account for the rest. Again, this does not apply to retail sales, but instead to total consumer spending. Like all other indicators, propensity to buy is a confidence indicator. It indicates whether consumers currently consider it advisable to make larger purchases. Even if they answer “Yes” to this question, there are two further requirements for making a purchase: The consumer must have both money required for such a large purchase and must also see a need to make this purchase. Furthermore, this only concerns durable consumer goods that also require a larger budget.
GfK Consumer Climate powered by NIM
The GfK Consumer Climate survey, which has been carried out monthly since 1980, is regarded as an important indicator of German consumer behavior and a guiding light for Germany’s economic development. Since October 2023, the Consumer Climate data collected by GfK has been analyzed and published jointly with the Nuremberg Institute for Market Decisions (NIM), the founder of GfK. By joining forces, it will be possible to invest further in the analysis and development of the Consumer Climate study to gain an even better understanding of the background to changes in consumer confidence.
For over 89 years, we have earned the trust of our clients around the world by solving critical questions in their decision-making process. We fuel their growth by providing a complete understanding of their consumers’ buying behavior, and the dynamics impacting their markets, brands and media trends. In 2023, GfK combined with NIQ, bringing together two industry leaders with unparalleled global reach. With a holistic retail read and the most comprehensive consumer insights - delivered with advanced analytics through state-of-the-art platforms - GfK drives “Growth from Knowledge”.
For more information, visit GfK.com.
Nuremberg Institute for Market Decisions
The Nuremberg Institute for Market Decisions (NIM) is a non-profit research institute at the interface of academia and practice. NIM examines how consumer decisions change due to new technology, societal trends or the application of behavioral science, and what the resulting micro- and macroeconomic impacts are for the market and for society as a whole. A better understanding of consumer decisions and their impacts helps society, businesses, politics, and consumers make better decisions with regard to “prosperity for all” in the sense of the social-ecological market system.
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