Collectively saving funds through purchases stimulates an underlying potential.
With an anticipated boost in their financial means, consumers appear to have a stronger urge to spend. Yet, they continue to hold onto their money tightly. Consequently, specialists view this modest enhancement in consumer inclination more as a stabilization rather than a sign of a shift in trend.
The German consumer sentiment has shown a moderate recovery following a substantial dip in the preceding month. As per the analysis of Rolf Bürkl, a consumer expert, "After the significant setback last month, the slight improvement in consumer sentiment can be viewed more as a stabilization at a minimal level." A substantial recovery is yet to be seen.
According to market research firm GfK and the Nuremberg Institute for Market Decisions (NIM), both income expectations and the propensity to buy have shown improvement. As a result, the consumer climate forecast for October ascends slightly by 0.7 points to -21.2 points.
The income expectations climbed by 6.6 points to 10.1 points, thereby boosting the propensity to buy, which rose by 4 points to -6.9 points. However, the institutes emphasized that this level is still "extremely low."
The overall consumer climate recovery is hampered by the improved savings tendency, which rose this time by 1.3 points. In conjunction with income expectations and the propensity to buy, it constitutes the consumer climate, serving as a leading indicator for consumer development in the upcoming month.
"Private consumption remains constraint"
Furthermore, expectations regarding the economy's development were surveyed. These declined this month, with the indicator decreasing by 1.3 points to 0.7 points. Consequently, the Germans' view of the country's general economic situation over the subsequent 12 months has remained stagnant for approximately half a year.
Cyrus de la Rubia from the Hamburg Commercial Bank pointed out that despite the rise in income expectations and actual incomes, households are still unwilling to spend more. "The marginal increase in consumer confidence certainly does not signify a shift in direction."
Alexander Krüger from Hauck Aufhäuser Lampe stated, "The mood is recovering somewhat, but it's far from reaching takeoff." The high savings tendency indicates that consumers choose to hoard their money rather than spend it. "The consumer climate does not foster optimism, private consumption remains constrained."
GfK and NIM conduct monthly interviews with consumers. For the current survey, around 2,000 individuals were interviewed between September 5 and 16. The consumer climate refers to all private consumption expenditures, which include retail, services, travel, rent, and healthcare services.
Following the improvement in income expectations and the propensity to buy, some consumers may consider making a purchase. Nevertheless, the high savings tendency indicates that many consumers are still reluctant to spend, keeping private consumption somewhat constrained.
Despite the slight enhancement in consumer sentiment, the overall economic situation view for the next 12 months has remained stagnant, suggesting a cautious approach towards purchase decisions.
