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Fall In German Consumer Confidence

James Boston
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Fall In German Consumer Confidence

The consumer sector in Germany has further deteriorated according to the latest report from GFK. This GFK Consumer Confidence Survey for the month of October now stands at a level of 8.3, this is the second consecutive month that this gauge has fallen, the September reading was 8.6 and there was an expectation that today’s number would be more in the region of 8.5.

The evidence now appearing of a softening in the domestic market does not bode well for a return to the recovery path for the Eurozone’s largest economy. Earlier in the week the IFO surveys of current and future business conditions also continued on their downward trajectory suggesting that concerns among the state of the German recovery are growing more and more pervasive. It is this crumbling of the optimism in what has so far been the one of most solid and upbeat economy’s in Europe that is of the greatest concern for the overall Eurozone. So far however the downturn in domestic consumer and business outlook has not directly manifested itself in a noticeable fall in economic conditions but a failure to turn sentiment around could lead to actual economic damage as spending and investment are put on hold. Should these early warning signs of economic trouble in Germany come to pass then the hand of the German government will be weakened and it’s attempts to impose fiscal discipline, via the EU, on other Eurozone economies will prove all the more difficult.

One thing that may help consumer spending is the announcement this morning that Import Prices are continuing to fall. The latest figures show the Import Price Index to be down -1.9% when measured on a year on year basis, this is an acceleration in the rate of price fall that was recorded as having fallen -1.7% in the prior month of July.

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