After several months of negative trends with ever-new all-time lows, German consumer sentiment improved slightly in November. As shown by the current consumer barometer of the German Retail Association (HDE), the index increased slightly compared to the previous month. However, the barometer remains at a low level.
In recent months, consumption in the country has been characterized by strong restraint. This negative trend does not persist in November. The propensity to buy among consumers is growing, just in time for the holiday season. Although it remains at a low level, the gradual easing of consumer restraint allows a somewhat more optimistic view of the run-up to Christmas.
According to the latest survey results, income expectations are rising. This presumably also reflects the relief measures announced by the German government to cushion high gas and electricity costs in the current energy crisis. Consumers’ economic expectations also improved slightly for the first time in five months. Consumption is being dampened by a slightly higher tendency to save money.
Although the continuous slowdown in consumer sentiment has come to an end, for the time being, there is still no indication of optimism. Instead, the mood among consumers remains quite gloomy, despite slight improvement. The rising cost of living continues to be viewed with concern. The coming weeks will show whether the reluctance to spend will continue into the Christmas season. Should the recession, which has so far failed to materialize, set in over the coming quarters, a renewed weakening of consumption is to be expected.
The HDE Consumption Barometer is published monthly and based on a survey of 1,600 people on the propensity to buy, the propensity to save, the financial situation and other consumption-related factors. It does not reflect current consumer behavior but rather the expected mood over the next three months.
