German consumer sentiment weakens further as recovery hopes fades

Consumer sentiment in Germany declined for a third straight month in October, as hopes of a recovery before the end of the year begin to fade.

The GfK's forward-looking forecast value for the consumer climate in November dropped to -28.1 points, compared with a revised -26.7 the previous month.

Analysts were expecting a figure closer to -26.5.

The survey, which was published jointly by GfK and the Nuremberg Institute for Market Decisions, found that consumers' propensity to save increased, from 8.0 to 8.5, which "reinforces the downward trend in consumer sentiment".

Rolf Bürkl, consumer expert at NIM, said any hopes of a recovery this year "must finally be laid to rest", with inflation still ticking along at the 4.5% level (as of September).

“Above all, high prices for food are weakening the purchasing power of private households in Germany, so private consumption will not be able to support the economy this year," Bürkl said.

The income expectations sub-index dropped from -11.3 to -15.3, while the propensity to buy was more or less unchanged at -16.3 – the lowest since the financial crisis in 2008.

"The propensity to buy remains at this low level for about a year now and still shows no signs of improvement. In addition to high inflation, the fact that unemployment has recently increased slightly again may also play a role. As a result, many employees' concerns about job security will increase. The concern is also heightened by increasing corporate bankruptcies, which are also causing uncertainty. All of this is dampening the mood of German consumers to spend," the survey said.