By Ed Frankl
Consumer confidence in Germany weakened for a third consecutive month in data for November, with respondents turning more to saving than spending as income expectations took a hit.
Germany’s forward-looking consumer-sentiment index forecasts confidence to fall to minus 28.1 in November, from minus 26.7 in October, according to data published Tuesday by market-research group GfK and the Nuremberg Institute for Market Decisions.
The reading missed expectations according to a consensus of economists polled by The Wall Street Journal, which forecast the index to remain at minus 26.7.
It comes after consumer confidence in the eurozone as a whole also fell for the third-straight month in data published on Monday.
“With the third decline in a row, hopes of a recovery in consumer sentiment this year must finally be laid to rest,” Rolf Buerkl, consumer expert at NIM, said.
High food prices in particular are weakening the purchasing power of private households, meaning consumption won’t support the economy this year, he added.
Inflation ticked down to 4.5% in September, from 6.1% in August, although it remains well above the 2% target set by the European Central Bank. Food inflation, meanwhile, was still high at 7.5%, albeit slowing from 9.0% in August. The ECB meets this week, with economists near unanimous in expecting policymakers to hold the key rate at 4.0%
Income expectations took a particular hit in the month, amid the squeeze in spending, falling 4 points to minus 15.3 points in one of the survey’s sub-indexes, GfK said.
Consumers also are continuing to pivot more to saving than spending, with the survey’s measurement of propensity to buy hovering around the lowest levels since the financial crisis of 2008, the survey said.
But in contrast to falling sentiment elsewhere, economic expectations ticked up on month, and are almost 20 points higher than at the same time in 2022–though they still fail to signal a sustained recovery in Europe’s largest economy, according to GfK.
Germany’s economy is expected to contract by 0.4% this year, the most among larger euro-area economies, according to the European Commission’s latest forecasts published in September.
Write to Ed Frankl at edward.frankl@wsj.com
