German Consumers Not Worried About a Greek Exit
THE TAKEAWAY: Gfk consumer confidence survey comes in at 5.7 for June, May survey revised higher to 5.7 -> Report says Germans are encouraged by the improving economy -> EURUSD not moving much in today’s session
German consumers aren’t worried about Greece.
That was the message of the Gfk consumer confidence survey for June which came in at 5.7, remaining steady with the survey for May which was revised higher to 5.7. Analysts expected the June level to come in at 5.6, which was the initial result reported from last month’s survey.
The Gfk report said that consumers are ‘considerably more optimistic’ and their willingness to spend has also increased. However, expectations for income have slightly dropped. The survey is based on interviews conducted by GFK with 2,000 consumers.
The report suggested that German consumers see the growth of the economy in the first quarter of this year as a bounce back from last year’s fourth quarter slump, and consumers aren’t concerned about the euro debt crisis affecting Germany.
Today’s positive consumer confidence report follows the worse than expected drop in German business confidence in May reported by IFO yesterday. Despite the Q1 expansion, businesses are worried about the financial ramifications of a Greek exit from the euro. Markit economics also announced yesterday that German manufacturing output was measured at its lowest point since June 2009, while the Producer Managers index for services came in higher for the month of May.
Despite yesterday’s negative economic outlook, consumer confidence falls in line with the European Commission forecast of a 0.7% expansion in Germany in 2012, in contrast to a negative forecast for the Eurozone economy on the whole.
Despite the steady German confidence, EURUSD dropped towards today’s low at 1.2517, before returning to the previous level before the report. Since yesterday afternoon, the pair has not moved much following an early morning drop to new 2-year lows.