This morning, the German Gfk consumer confidence index for January 2012 (preliminary) came in at 5.6, unchanged from December's level. Looking at the breakdown, price expectations for December went up to -1.8 from -4.1 in November. Also, business cycle expectations improved to -0.9 from -7.2 last month.

Income expectations rose to 34.0 from 31.1 earlier, while the propensity to purchases fell to 27.4, down from 40.3 earlier, and the propensity to save rose slightly to -12.2 from -13.3 earlier.

Overall, German consumer sentiment has remained fairly robust even in times of the credit market crisis - which should be helped by the ongoing favourable labour market situation (note that German employment has remained, despite the crisis, at the highest level since the early 1990s).

We believe that private consumption is set to grow by 0.4 % q/q in Q4 this year (Q3: 0.8 %), thereby making a positive contribution to real GDP expansion in 2011 (which we forecast to be 3.0% y/y, followed by 0.5% y/y in 2012).


source: BarCap