GFK Index Has Slow Rebound from Its Lows in Progress for 2024

The GfK survey for Germany improved to -25.1 from -27.6. It's the largest month to month rise and the climate index since May of 2023. The level of the climate index in January of 2024 at -25.1 is the strongest reading since August of 2023. The reading has a ranking in the 6.8 percentile of its ordered queue of observations, keeping it as a bottom 10 percentile reading to start the new year.

The components of the climate index, economic and income expectations, and the propensity to buy index, each improved in December. The components lag the headline by one month. The economic index rose to -0.4 in December from -2.3 in November income expectations rose to -6.9 from -16.7 in November. The propensity to buy improved to -8.8 in December from -15.0.

Economic expectations were at their strongest since July of 2023 and the same is true for expectations. However, the propensity to buy measure was last stronger back in March of 2022.

The GFK headline as well as its components show improving trends. The chart at the top shows that climate has been engaged in a climb out from a very deep negative reading that bottomed out approximately one-year ago.

The buying index is making a nice jump after a long period of flatness at lower levels. Income expectations are rising back and the neighborhood of a peak that they had seen back in July; economic expectations are making a slow climb up but are still well short of their best readings from earlier of 2023 that were experience in April. There has been some oscillation in the German economic and income expectations readings.

Other Europe Confidence measures for other European countries in the table are stronger than for Germany. Italy and France have observations that are up to date only through November. Italy and France show month-to-month improvements in November compared to October. The Italian measure has a 63-percentile standing while the French measure has a 26 percentile standing. In Italy the standing is above its historic median whereas for France the index is well below its median and barely above the lower quartile compared to historical data back to 2002. The UK has a confidence rating up to date through December. The UK reading strengthened in November and in December rising to the level of -22 and December from -24 in November and from -30 in October before that. That is nearly back to the reading of -21 from September of 2023. However, it still has an extremely low percentile ranking in it's 29th percentile stuck between the Borders of the lower quartile and the lower third of its historic range.

The GfK measure still shows a lot of weakness as the new year begins although there is a dig out in place; we can see the GfK climate measure it is gradually clawing its way to higher levels. Italian consumer confidence is the best of the lot in this table; French confidence is still weak and close to weakness we see in the UK. But in the UK at least is on a strong movement higher over the 12-months; much stronger than the gains being made by confidence in Italy and in France. However, for the most part, I characterize European confidence as weak and still challenged.