Consumer confidence hits 13-year high

Driven by low oil and energy prices, German consumer confidence is at its highest in 13 years, according to new figures released on Wednesday.

For the second time in a row, consumer confidence in Germany has noticeably grown, market researchers GfK said.

"Consumers are noticeably more confident as they enter the new year and the consumer climate is continuing to improve," the statement read.

"Economic and income expectations, as well as the propensity to spend, have all increased tangibly."

Domestic consumer demand also rose to an eight-year high for January.

GfK noted that the last time the figures were at this level was prior to a rise in the VAT sales tax increase, which led many people to rush to shops to stock up on big purchases before they got more expensive.

Looking ahead to next month, GfK's headline household confidence index was forecast to rise to 9.3 points in February from 9.0 points in January.

"That is the highest level since November 2001. The upward trend is continuing in the consumer climate. The outlook for consumer spending is looking increasingly brighter," GfK said.

Consumers expect lower energy and oil prices combined with a falling euro to drive down the prices of German-manufactured goods.

Domestic demand would therefore be a major factor in overall recovery this year, the institute predicted.

Earlier this week, the widely-watched Ifo business climate index rose for the third time in a row to its highest level in six months.

The company polled 1,000 Germans to arrive at their findings. 

SEE ALSO: Business makes confident start to 2015

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


German shops hit by supply problems ahead of festive season

Germany's business climate worsened in October for the fourth month in a row as supply chain woes weighed on the country's export-driven economy, according to survey data published Monday.

A man walks through the MediaMarkt carpark
A man walks through the carpark of MediaMarkt in Eschweiler, North Rhine-Westphalia. Photo: picture alliance/dpa | Henning Kaiser

The Ifo institute’s closely watched indicator fell to 97.7 points in October from 98.9 points in September, its lowest standing since April, as businesses in Germany were hit by supply chain fears. 

“Supply problems are giving businesses headaches,” Ifo president Clemens Fuest said in a statement, describing the bottlenecks as “sand in the wheels of the German economy”.

The upheaval caused by the pandemic has given rise to global shortages in everything from timber to semiconductors and plastics.

Germany’s key automotive sector has been hit hard by a lack of computer chips, a key component in both conventional and electric vehicles, forcing several German carmakers to pause production.

The news comes after German shops aired concerns that popular Christmas gifts could be short supply when the festive season rolls around.

A recent survey of retailers conducted by the Ifo Institute revealed that 100 percent of bicycle shops were facing supply issues, while the vast majority of furniture, electronics and DIY stores were also struggling to replenish stocks.

In particular, the shortage of chips is expected to have a knock-on effect on the availability of laptops and smartphones. Economics experts believe the issues with electronics and cars could continue until at least 2023. 

READ ALSO: Why everything is suddenly getting so expensive in Germany

Only in construction did the business climate improve, according to the Ifo survey, while sentiment in manufacturing, services and trade deteriorated.

Growth could be “much weaker” in the coming months, according to Fritzi Koehler-Geib, chief economist at German public lender KfW.

“Material bottlenecks and disruptions in the global transport system have been a burden for longer than originally expected and will probably only ease in the coming year,” Koehler-Geib said.

Earlier this month, German economic institutes, including Ifo, revised down their forecast for growth in 2021 due to global supply chain disruptions to 2.4 percent from their earlier prediction of 3.7 percent made in April.