The rate of deterioration in the consumer climate has markedly slowed. This is attributable to the current rush of economic optimism and for the continuing upward trend in consumer income expectations. The consumer climate indicator is forecasting 4.4 points for March this year, which is down on the revised February forecast of 4.9 points.




The weaker consumer climate anticipated for the start of the year can be attributed virtually exclusively to the decline in consumer propensity to buy. However, given the current situation, it is quite possible that the present low will be overcome in the second quarter. In the absence of any sharp reaction to the increased rate of VAT, consumer uncertainty concerning the further development of living costs could gradually evaporate. This could mean a relatively rapid return of the propensity to buy to a level in line with the generally positive economic and income expectations.

German consumer expectations of a strong and sustainable economic upturn gathered pace in February. Compared with the previous month, economic expectations rose sharply by 15.8 points. At its present level of 53.3 points, the indicator has yet to achieve its August 2000 level.

The recovery of income expectations which started at the beginning of the year continued in February. With an increase of more than 11 points in January, the indicator once again rose 8 points. Currently standing at 2.9 points, it has broken through the zero mark.

Consumer uncertainty regarding the real impact of the tax increase has not yet evaporated. In February, the propensity to buy indicator once again dropped by just under 11 points to currently stand at -16 points. The sole reason for the declining consumer climate remains the low propensity to buy. However, if this quickly comes into line with the general economic climate, the weakness in the consumer climate may only persist for a relatively short phase.