December 21, 2018 / 7:03 AM / 9 months ago

German consumer morale holds steady heading into January - GfK

    BERLIN, Dec 21 (Reuters) - German consumer sentiment
remained strong going into January, the GfK market research
group said on Friday, suggesting that household spending in
Europe's largest economy will start 2019 on a solid footing. 
    The GfK consumer sentiment indicator, based on a survey of 
around 2,000 Germans, was unchanged at 10.4 heading into
January. That beat the forecast of 10.3.
    Household spending has become a key growth driver in recent
years as Germans benefit from record-high employment, hefty pay
hikes and low borrowing costs but private consumption weakened
during the third quarter, holding back overall growth.
    "The persistent trade conflict between the USA, China, and
the EU, as well as uncertainty caused by Brexit, is causing
economic optimism among consumers to increasingly disappear,"
said Rolf Buerkl, a researcher for Nuremberg-based GfK. 
    "German citizens see risks for their nation of exports
predominantly in impending trade restrictions, such as higher
customs duties. Dwindling exports are curbing growth," Buerkl
    Despite being more downbeat about the economy, consumers
were more optimistic about their future income thanks to rising
employment. Their willingness to make purchases declined but
remained at a high level.
    GfK said the prospects for consumption remained good for
2019 as long as the job market continues to develop stably.
    However, it warned that if the trade conflict with the
United States heats up or Britain exits the European Union
without a deal in place, consumption could be hit. Budget policy
in France and Italy could also cause conflict, it said.
    The GfK survey was conducted from Nov. 30 to Dec. 14.    
                                 JAN 19    DEC 18    JAN 18
 Consumer climate                10.4      10.4      10.8
 Consumer climate components     DEC 18    NOV 18    DEC 17
 - willingness to buy            53.1      57.5      57.1
 - income expectations           53.8      50.2      54.3
 - business cycle expectations   14.1      17.4      45.2
    NOTE - The consumer climate indicator forecasts the 
development of real private consumption in the following month. 
    An indicator reading above zero signals year-on-year growth 
in private consumption. A value below zero indicates a drop in 
comparison with the same period a year ago. 
    According to GfK, a one-point change in the indicator 
corresponds to a year-on-year change of 0.1 percent in private 
    The "willingness to buy" indicator represents the balance 
between positive and negative responses to the question: "Do you
think now is a good time to buy major items?" 
    The income expectations sub-index reflects expectations 
about the development of household finances in the coming 12 
    The additional business cycle expectations index reflects 
the assessment of those questioned of the general economic 
situation in the next 12 months. 

 (Reporting by Michelle Martin
Editing by Joseph Nasr)
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