|German consumer confidence eases unexpectedly
German consumers confidence eased unexpectedly heading into September, though their willingness to buy remained at the highest level since the end of 2006, market research institute GfK said on Wednesday.
The institute's forward-looking indicator for consumer climate slipped slightly in September to 6.9 points from 7.0 points in August. This was against economists' expectations that the indicator would at least remain unchanged, Xinhua news agency.
According to the Nuremberg-based institute, the decline of consumer confidence was mainly due to lower outlook for German economy and the resulting weak income expectations.
"For the coming months, consumers are expecting the recovery of German economy to be rather sluggish," said GfK in a statement, "Consumers clearly feel that though the German economy is improving, recovery is likely to be rather slow over the coming months. Small setbacks can also not be entirely ruled out."
In August, the indicator measuring consumers' expectation for German economy in the next 12 months fell by 2.5 points, a drop for the first time following three consecutive months.
GfK's indicator for consumers income expectations also dropped in August by 5.6 points from a two-year high last month. "The slightly less optimistic economic outlook of consumers could be a possible reason for this decline. The increased price expectations of consumers in August potentially also played a role," said GfK.
In July, German inflation rate increased to 1.9 percent, driven by higher food prices. In June, it was 1.8 percent and in May it had been 1.5 percent.
"Consumers evidently fear that their purchasing power will come under pressure and are taking a slightly more restrained view of their income prospects," said GfK.
Thanks to a historically low interest rate and the increasing inflation rate, German consumers were more willing to purchase in August. The indicator for consumers' willingness to buy increased to 44.4 points, the highest since the end of 2006.
The purchase included real estate. It was reflected in the second quarter gross domestic product data which grew by 0.7 percent attributed by not only private consumption, but also investment in construction.
GfK confirmed its forecast that private spending would increase by about one percent in 2013, and play an essential role in stimulating German economy.
Currently, German government expected that German economy would grow by 0.5 percent in 2013, and by 1.6 percent in 2014.