- Rolf Buerkl, an analyst at GfK
Following a decline in German business morale in June, consumers also became more cautious for the first time since October, as the Greek debt crisis weighs on the Euro zone's number one economy. The forward-looking GfK consumer sentiment index, based on a survey of 2,000 Germans, declined to 10.1 going into July, down from 10.2 in June. GfK said that Greece's default and exit from the currency bloc, which had seemed a remote possibility, now appears to be quite realistic. Nevertheless, consumers' income sub-index rose to 57.2 in June, up from 52.0 a month earlier, reaching a new high since German reunification. At the same time the "willingness to buy" sub-index fell to 57.0 from May's 62.6, but remained at a very high level. Workers are likely to see a 3% increase of their wages this year, and given that inflation is below 1%, there would be a considerable increase in disposable income. GfK uses the current month's data to derive a figure for the forthcoming month. Earlier in the week, Ifo said German business morale dropped sharply this month amid concerns over Greece. Ifo's business climate index slid to 107.4 in the current month, compared with 108.5 in May.
The German economy grew 0.3% in the beginning of 2015, and many economists anticipate the Euro zone's largest economy to expand faster between April and June.
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