Income Expectation in Germany Again Hits a Record High

The mood among German consumers in August shows a positive but non-uniform pattern. Both income expectation and propensity to buy have been able to improve their already outstanding levels, while economic expectation was less impressive after five increases in a row. GfK forecasts an increase in consumer climate for September of 0.1 points in comparison to the previous month to 10.9 points.

Consumers in Germany see the domestic economy continuing on a very good path. After economic prospects among consumers had reported growth since April, they suffered a blow in August. Economic expectation loses 14.2 points, falling to 30.4. The indicator continues to maintain a good level overall, though. Compared with the previous year, it still shows a major increase of nearly 22 points.

Despite the losses, German consumers still see the German economy on a solid path to growth. It remains to be seen whether the drop in August was just a one-time "slip". A number of citizens are possibly somewhat worried about whether the exporter nation of Germany can show development as dynamic as it has up to now in the face of the debate regarding the future of the diesel automobile and numerous other crisis flash points.

The economic experts assume that Germany will maintain its course of growth. The Federal Office of Statistics reports that the gross domestic product increased in the second quarter of 2017 by 0.6 percent over the previous period. Germany's central bank assumes in its current monthly report that the economy can even grow somewhat more this year than by the 1.9 percent forecast in June.

Income expectation continues to move from record to record this month. This indicator rose by 0.5 points in August to reach 61.4. This is already the fifth increase in a row. With it, the indicator has reached a new post-reunification high. Not since 1991, when consumer mood was first recorded for all of Germany, has a better result been measured.

A basic reason for this string of records is and remains the exceptionally positive situation in the jobs market, which is also rushing from record to record. The employment numbers are continuing to increase. Despite temperate economic prospects, citizens in Germany were very much in the mood to buy in August, too.

The very positive employment situation in Germany is and remains the most important factor for the good consumer mood. Stable employment means very little fear of job loss. As a result, Germans are more willing to be somewhat riskier in financial dealings and make larger purchases, which could also involve credit.

A very weak continuing propensity to save has given the consumer mood an additional boost. The indicator did in fact rise in August, but could not make up for the big losses from the previous month. So propensity to save remains very far down in the summer of 2017 as well.

Following on from 10.8 points in August, GfK forecasts an increase to 10.9 points in September. This is the fifth increase in a row, and the highest level since October 2001. With it, the consumer mood in Germany remains on a stable course for growth.