Germany Consumer Sentiment Hits All Time Low with Recession and Natural Gas Shortage Fears

The German people’s sentiment continues to suffer from soaring energy and food prices, the shadow of war in Ukraine and the morose sentiment thereto. The GfK Consumer Climate Indicator for Germany fell to a new record low of -30.6 heading into August of 2022 from a revised -27.7 in June. Forecasts were -28.9. Germany’s once stoic V-shaped recovery has long been put to bed. The ECB raised key rates by 50 bps in its July monetary policy decision which further clouds the mood.

German GfK Consumer Climate Indicator for July 2022

  • Consumer Climate -30.6 from a record low of -26.6
  • Economic expectations fell 6.5 points to -18.2, its lowest level since April 2020, when Germany was put into coronavirus lockdown.
  • Income expectations lost 12.2 points to a record low of -45.7
  • Propensity to buy edged down 0.8 points to -14.5, the lowest since October 2008.

“In addition to concerns about disrupted supply chains, the Ukraine war and sharply rising energy and food prices, there are now fears of sufficient gas supply for the economy and private households next winter. This is currently depressing consumer sentiment,” explains Rolf Bürkl, GfK consumer expert. “Especially since a scarce supply of natural gas is likely to increase the pressure on energy prices and thus inflation.”

Survey method

The survey period for the current analysis was from 30 June to 11 July 2022. The results are an excerpt from the study “GfK Consumer Climate MAXX” and are based on around 2,000 consumer interviews per month, which are carried out on behalf of the EU Commission. In this report, the indicators are graphically prepared and briefly commented.

The consumer climate explicitly refers to total private consumer spending. However, depending on the definition, the retail trade accounts for only about 30 percent of private consumer spending. The rest are services, travel, rent, health services as well as the entire wellness area. Again, this is not about retail sales, but about total consumer spending. Like all other indicators, the propensity to buy is an indicator of sentiment. She asks whether consumers currently consider it advisable to make major purchases. Even if they answer “yes”, there must be two other requirements for a purchase: The consumer must have the necessary money for such a larger purchase and also see a need for this purchase. In addition, these are actually only durable consumer goods, which also require a larger budget.

Source: GfK Group

From The TradersCommunity Research Desk