Consumer sentiment in Germany declined significantly in November: income expectations fall sharply and the willingness to buy declines slightly. As the willingness to save rises at the same time, the forecast for the last month of this year decreases significantly. Compared to the previous month, the consumer climate for December goes down 4.9 points (revised -18.4 points) to -23.3 points – a similar level to December 2023. German consumers are also more pessimistic about the development of the general economic situation for the fourth time in a row.
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This is shown by the latest results of the GfK Consumer Climate powered by NIM. It has been published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM), founder of GfK, since October 2023.
In particular, the significant decrease in income expectations for the next 12 months, as well as a slight decline in the willingness to buy, erase the recent recovery in consumer sentiment. A renewed rise in the willingness to save, which increased by 4.7 points, reinforces the negative trend.
'The final weeks of the year are concluding with a significant setback in consumer sentiment. The -23.3 points measured for December are the lowest level since May of this year (May 2024: -24 points). Consumer sentiment in Germany is therefore currently at a level comparable to the end of 2023,' explains Rolf Bürkl, consumer expert at NIM. 'Consumer uncertainty has increased again recently, as evidenced by the rising willingness to save. There is also another uncertainty factor: concerns about job security in Germany are growing. The reasons for this are certainly the job cuts reported by industry and the relocation of production abroad. In addition, the number of insolvencies has risen recently. In short, the consumer climate remains poor.'
Recession worries continue to grow
Initial hopes of a cautious economic recovery faded during the year. Germans continue to take a pessimistic view of the general economic situation in Germany in the coming 12 months: The economic indicator falls to -3.6 points after a drop of 3.8 points. This is already the fourth decline in a row. A lower value for the economic outlook was last measured in February 2024 with -6.4 points.
Rising insolvency figures and reports of impending job losses further dampen economic expectations. Both economic experts and the German government have revised their growth forecasts for this year downwards to a "red zero". The forecasts for next year are also rather modest, with gross domestic product expected to grow by just 0.4 percent.
Table: NIQ.
Income expectations fall to a nine-month low
In November, consumers' income expectations for the coming year fell due to growing fears of recession. The indicator lost 17.2 points, plummeting to -3.5 points. A worse value was last measured 9 months ago, in February 2024, at -4.8 points.
Growth forecasts for this year and next have been revised downwards, and unemployment has been on the rise again for some time. As a result, German consumers are once again less optimistic about their expected income situation. Especially as the expected wage increase of around 2 percent in 2025 means that real income growth is likely to be a thing of the past.
Willingness to buy with slight losses
In the wake of falling income expectations, the willingness to buy also shows slight losses. The indicator loses 1.3 points and now stands at -6 points. Compared to the same period last year, the increase is currently 9 points. However, the willingness to buy is below the level at the time of the two lockdowns in spring 2020 and early 2021. The level of willingness to buy remains extremely low.
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