German GfK consumer morale edges down heading into July

    BERLIN, June 26 (Reuters) - German consumer morale fell
heading into July as the slowdown weighing on Europe's largest
economy darkened income expectations among shoppers, a survey
showed on Wednesday. 
    The GfK consumer sentiment indicator, based on a survey of 
about 2,000 Germans, fell for the second time in a row to 9.8
from 10.1 a month earlier. Economists polled by Reuters had
expected a reading of 10.0.
    Household spending has become a key source of growth in
Europe's biggest economy as record-high employment,
above-inflation pay hikes and low borrowing costs boost domestic
    The economy has been facing headwinds from trade conflicts,
Brexit uncertainties and a cooling world economy, which are
hurting Germany's export-oriented manufacturers.
    There are fears the slowdown in manufacturing could spill
into the services sector and dent the robust labour market. 
    The GfK survey showed that consumer confidence has been
shaken, mainly as a result of concerns that German carmakers,
which are grappling with trade frictions and a shift toward
electric vehicles, could cut thousands of jobs.
    "So far, the income indicator has been able to benefit from
the excellent development of the job market in Germany. But now
the voices heralding the end of the employment boom are
growing," said Rolf Buerkl, a researcher for GfK.
    A sub-index measuring income expectations fell to its lowest
level since March 2017.
    Still, consumers' propensity to spend rose as shoppers
seemed unperturbed by growing doubts about job security.
    "Whether this will remain the case depends heavily on how
income prospects develop in the coming months," GfK said. "If
the significant loss suffered by this indicator in June turns
into a persistent downward trend, it will also be tough for
propensity to buy to maintain its currently excellent level."
    The GfK survey was conducted from May 31 to June 14.
                                 July 19   June 19   July 18
 Consumer climate                9.8       10.1      10.5
 Consumer climate components     June 19   May 19    June 18
 - willingness to buy            53.7      50.5      55.1
 - income expectations           45.5      57.7      57.4
 - business cycle expectations   2.4       1.7       19.4
    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 Riham Alkousaa
Editing by Joseph Nasr)