Germany’s consumer confidence is set to weaken in September after three months of improvement, and defied expectations for a strong gain as income expectations deteriorated, survey data from the market researcher GfK showed on Friday.
The forward-looking consumer confidence index for September dropped to -1.8 from -0.2 in August, which was revised from -0.3. Economists had expected a positive reading of 1.2.
The weakening of consumer confidence was led by the drop in the income expectations index that fell to 12.8 in August from 18.6 in July.
Economic expectations, propensity to buy as well as saving intentions showed modest gains.
“An increase in the number of infections and the fear that [coronavirus][1]-related restrictions will be further tightened are creating uncertainty and consequently dampening the mood,” Rolf Bürkl, consumer expert at GfK, said.
The reduction in value added tax (VAT) which came into effect in Germany on July 1 may be boosting propensity to consume but has not yet been able to provide a stronger stimulus, the analyst said.
“Whether or not this is just a temporary slowdown will depend primarily on what infection rates look like in future and the necessary measures to be put in place by policy makers,” Bürkl added.
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