German GfK Consumer Confidence To Strengthen In August
German consumer confidence is set to continue strengthening into August from the weaker level caused by the coronavirus pandemic, as the reduction in the value-added tax boosted the propensity to buy, survey data from market research group GfK showed Thursday.
The forward-looking consumer sentiment index rose to -0.3 points from revised -9.4 in July. The expected reading was -5.0.
The consumer climate has risen significantly for the third consecutive period.
Gfk said German consumers are gradually putting the coronavirus shock of earlier this year behind them. A V-shaped trend is currently emerging for the consumer climate.
“There is no doubt that the reduction in value-added tax has contributed to the extremely positive progress,” Rolf Bürkl, GfK consumer expert, said.
“It is clear that consumers are looking to make major purchases earlier than planned, which will help boost spending this year. Whether this will have a lasting impact is, however, debatable,” Bürkl added.
While economic expectations gained slightly, income expectations and the propensity to buy increased significantly for the third consecutive time.
The economic expectations index rose only 2.1 points to 10.6 in July. Nonetheless, the last time a higher value was recorded was in December 2018 at 10.8 points.
Consumers expect the largest euro area economy to recover within a reasonable period of time. However, another wave of infections will quickly shatter any hope of economic recovery.
At the same time, the income expectations indictor climbed to 18.6 in July from 6.6 in June. The promise of a child bonus payment and a noticeable decrease in price expectations are propping up the income indicator, the market research group said.
Driven by VAT cut, the propensity to buy climbed sharply by 23.1 points to 42.5 in July.
The survey was conducted by GfK on behalf of the European Commission. The survey based on 2,000 consumer responses was carried out between July 1 and 13.
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