Consumer sentiment rises to five-year high

Consumer sentiment rises to five-year high

Even the escalation of the debt crisis in cyprus has not been able to put a lasting damper on consumer sentiment in this country, the market research institute gfk announced in nurnberg on tuesday. "Consumers appear to be very relaxed about their own economic situation in view of stable labor market figures and income increases."

Consumers’ buying mood in april was correspondingly buoyant. However, the burgers were less optimistic about the economy. Nevertheless, the consumer climate index for may, calculated by the gfk, rose to its highest level since october 2007: it climbed from a revised 6.0 points in april to 6.2 points today.

Germans don’t let the cyprus crisis spoil their desire to spend money. On the contrary, the controversial decision to include deposits of more than 100,000 euros in the crisis management for the first time actually cut the high flight of the local consumer climate. "The mere fact that it is basically possible for the state to get its hands on savings is enough to scare consumers," explained gfk consumer expert rolf burkl in an interview with dpa.

Many are concerned that they could one day suffer a similar fate.

Germans’ propensity to save had fallen to an all-time low in april. The willingness to save is seen as a mirror image of the propensity to buy, which recently increased slightly. Supported by stable employment, income growth and low inflation, this sub-indicator reached its highest level in more than a year.

After all, consumption is one of the few alternatives to a bank account, burkl explained. "I can go to the stock exchange and speculate. But after the dotcom bubble burst, many bundesburgers have become a bit more cautious."Especially as confidence in the financial markets is still in tatters following the lehman bankruptcy.

"From that point of view, people are looking for a value investment. The money (…) will not be "pointless consumed, but value acquisitions are purchased, especially real estate," reported the consumer expert. In line with this, the retail sector is not making any major leaps at the moment despite the good consumer mood. Sales fell by 1.4 percent in nominal terms and by 2.8 percent in price-adjusted terms in march compared with the previous year, according to the federal statistical office. However, march 2013 had two fewer sales days than march 2012. In february, sales had already fallen by 2.6 percent year-on-year after adjustment for prices.

The german retail association (HDE) spoke of stable development and expressed confidence for 2013 as a whole. "We have the entire summer business ahead of us. In this respect, we expect a good development," said HDE spokesman kai falk.

According to the gfk, the collective bargaining agreements concluded so far this year indicate a real increase in income for many employees. Since inflation is also developing rather moderately, many of the 2,000 or so respondents to the representative study expected their own incomes to improve in the coming months.

By contrast, after three consecutive increases, respondents’ optimism about the economy fell slightly in april and slipped below its long-term average value. "It appears that consumers are increasingly gaining the impression that the moderate recovery of the german economy predicted for this year will be rather sluggish or may even fail to materialize altogether," the gfk explained.

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