2019.08.2807:55:00UTC+00German Consumer Sentiment To Remain Unchanged

German consumer confidence is set to remain unchanged in September as the downturn in economic confidence was largely offset by the propensity to buy, survey data from market research group GfK showed Wednesday.

The forward-looking consumer sentiment index held steady at 9.7 in September, the Nuremberg-based GfK said. Economists had forecast the indicator to drop to 9.6.

The survey showed that the propensity to buy improved in August and income expectations dropped slightly.

Meanwhile, the economic outlook suffered a considerable decline as consumers see a risk of recession in Germany due to the global downturn, trade conflicts with the US, and prospects of no-deal Brexit.

The economic expectations index fell 8.3 points to -12 in August, the lowest since January 2013.

The income expectations indicator dropped by 0.7 points to 50.1. However, the level provides evidence of stability, Gfk said. Income expectations largely depend on labor market conditions.

If labor market conditions worsen significantly, this will certainly have an impact on future financial position of households, the GfK noted.

Industries that are export-reliant, namely the automotive industry and its suppliers, would see difficult employment situation. However, there was high demand for labor, particularly in the service industry.

At the same time, the propensity to buy recovered in August. The indicator rose by 2.5 points to 48.8 points.

The current economic downturn was defied by both the propensity to buy and income expectations.

GfK cautioned that increasing fear of job losses in particular could pose a risk for consumer sentiment.

"If in the future the labor market should become less stable and the threat of a significant increase in unemployment loom, the consumer economy would also suffer a significant setback," GfK said.