GERMAN DATA
The German GfK consumer climate increased by 2.7 to -18.3 in November from an upward revised -21.0, outstripping expectations of -20.5 and reaching its highest level since April 2022.
- "Both income expectations and the willingness to buy show an improvement for the second time in a row and the willingness to save falls slightly."
- Real income gains since the beginning of the year (3.8% Y/Y Q1, 3.1% Q2) have fostered the narrative that domestic demand in Germany should pick up at some point - that has not really materialized to date, however (consumer expenditure -0.2% Q/Q Q2 after +0.3% Q1). One driver here could that real wages are still around 3% below comparable 2019 levels.
- Being forward looking, we see little signal from the climate index for Wednesday's Q3 flash GDP release (MNI sellside consensus -0.3% Y/Y, downwardly revised by 0.2pp during the last month). However, for domestic demand, improvements in the consumer climate should be interpreted as a good sign.
- That's supported by strong wage expectations for Q3 ('Bundesbank Sees 9% Q3 Negotiated Wage Growth in Oct Monthly Report' - MNI, Oct 24). Retail sales strength at the end of summer supports the narrative, also.
- The GfK consumer climate indicator is "based on around 2,000 consumer interviews per month conducted on behalf of the European Commission".
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