A monthly survey by the German Retail Association (HDE) indicates a deterioration in German consumer sentiment in November. Following the recovery process after the first corona lockdown, so the index is falling for the first time in six months. Consumers are worried by the rising number of infections and growing uncertainty in the job market. There are signs of diminishing optimism in consumers’ income expectations, which are currently significantly lower than in the previous year. In particular, consumers’ expectations regarding the economy have been deteriorating. In the past two years, the willingness to buy has risen repeatedly in the period leading up to Christmas. At present, however, there are signs of a slight decline.

If the current trend in infection figures continues and even stricter containment measures are taken, consumer sentiment is likely to become even more pessimistic. A noticeable increase in private consumption is therefore very unlikely in the near future, according to the HDE survey. On the contrary, both a further rise in infection numbers and the expiry of the temporary VAT reduction at the end of the year – which is equivalent to a tax raise – could have additional negative implications on private consumption.

The HDE consumer barometer is published monthly, based on a survey of 2,000 people. It does not depict current consumer behavior, but rather the expected consumer sentiment for the next three months.

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