Consumer Climate: Renewed Confidence.

NUREMBERG, Germany, August 29 /PRNewswire/ -- Following several months of low morale among consumers, in August the consumer mood in Germany improved for the first time since April of this year. The indicators which record consumer mood, have shown consistent positive development compared with the previous month. Following the revised 3.2 points in August, the consumer climate forecast for September is 3.4 points.

Overall, the mood remains considerably less positive in eastern than in western Germany. While students and trainees and those with a higher income are predominantly positive in their attitude, the mood remains pessimistic among those disposing of a lower income and the older retired generation.

The overall development suggests that the election scheduled for September is having a positive effect on consumer mood. This does not mean, however, that the consumer climate will be affected positively in the long-term.

                 Economic outlook       Income         Propensity to
                                     expectations           buy
                      August            August            August
                Figure(1)  Change  Figure(1)  Change  Figure(1)  Change
                             on                on                on
                          previous          previous          previous
                           month             month            month(1)
    Students and     +0.4     +4.9    +34.7    +11.4     -7.4    -13.9
    trainees
    High             +3.6    +10.2    +20.5     +1.7    +24.8     +7.9
    income(2)
    Medium           -8.4     +8.1    -13.3     +6.2     +1.0    +20.1
    income(2)
    Low             -11.5    +13.4    -18.6     -6.2    -17.4    +13.7
    income(2)
    Older           -28.5     -8.5    -45.2     -1.4    -23.4     -5.6
    retired
    people
    Western          -6.8     +6.5     -6.3     +2.6     +3.1     +9.5
    Germany
    Eastern         -30.2     -4.5    -26.8     +5.1    -33.4     +4.2
    Germany
    Total           -11.6     +4.1    -10.6     +4.2     -4.5     +8.6
    (1) Indicator points. 0 is the long-term average.
    (2) Employed people and housewives/househusbands

It is impossible to predict whether the positive signs mark the beginning of a trend reversal. This is due to the fact that oil prices are high and likely to increase further and that the propensity to make major purchases probably represents an immediate effect of such purchases being made sooner than planned in anticipation of price hikes. Whether private consumption really is experiencing an upward trend will largely depend on the extent to which fuel price increases and higher consumer taxes will affect the budgets of private households.

A fundamental trend reversal in consumer behaviour will only come about following a sustained improvement in economic development and the employment market. It is evident that people are longing for positive signs in this respect and are also willing to contribute to an improvement in the situation by spending and generating a marked rise in the demand for consumer goods.

    Contact:
    Dr. Ulrike Schoeneberg,
    [phone],
    [e-mail]

Dr. Ulrike Schoeneberg, [phone], [e-mail]