German consumer morale down with post-Brexit fear

Consumer confidence in Germany during the month of July suffered in wake of fears surrounding post-Brexit uncertainty. Although markets had expected a slightly larger monthly decline, overall consumer spending is expected to rebound once Brexit anxiety subsides.

German consumer confidence edged lower according to the latest GfK data with an expected reading of 10.0 for August from the previous 10.1, although markets had expected a slightly larger monthly decline to 9.9. The component of economic expectations significantly retreated with a decline of 8.6 points to 9.4.

Moreover, according to the special question on the UK referendum, over 50 percent expect the vote to create negative effects. There was also a significant decline in income expectations for the month with the index just below the 50.0 level at 49.7, which should undermine spending intentions, reports said.

In contrast, there was an improvement in the reported propensity to consume, with spending expectations boosted by a continuation of very strong confidence surrounding individual job security with 95 percent of respondents not concerned about their jobs.

Meanwhile, overall consumer spending is expected to remain robust in the short term and there will be potential for an overall improvement in wider consumer confidence as immediate concerns surrounding Brexit fade, reports added.