Consumer sentiment in Germany recovered significantly in December, despite uncertainties related to further recovery in consumption due to the federal government’s budget, the HDE retail association noted.
The latest German Trade Association (HDE) Consumption Barometer reached its highest level this year, as well as its highest level since November 2021, the data showed.
Last month, consumer sentiment in Germany fell noticeably for the first time in 12 months.
However, the latest data indicates that the deterioration in November was not the start of a negative trend.
Consumers are significantly more optimistic about the coming weeks than in previous months, and the propensity to buy has increased.
The HDE added that private consumption is likely to stabilise in the last month of this year, and that will be good news for the current Christmas business.
Challenges
The retail association has cautioned of risks due to the federal government’s budget crisis, which could result in further uncertainty for consumers.
The fact that some projects and funding cannot be implemented or continued in the future could impact disposable income, the HDE noted.
The HDE’s Consumption Barometer, published on the first Monday of each month, is based on a monthly survey of 1,600 people on their propensity to buy, propensity to save, financial situation, and other consumption-related factors.
The Consumption Barometer, compiled by the Handelsblatt Research Institute (HRI) on behalf of the HDE, serves as an indicator of private consumption.
It does not reflect current consumer behaviour, but, rather, the expected mood over the next three months.
A separate survey by GfK showed that German consumer sentiment improved slightly heading into the Christmas month, but remained at a very low level, with no signs of sustainable recovery in Europe’s biggest economy.
