German consumer sentiment rises slightly but optimism is so far very limited

German Gfk Institute consumer sentiment index rose to -41.9 into November from -42.8 in October and in line with expectations.

The data spark optimism that German consumer morale would slightly recover in November after holding at record lows for four straight months, but economists remain very cautious and still do not see prospects of a trend reversal, as situation remains very tense for consumer sentiment.

On the other side, the subindex which tracks economic expectations fell to -22.2 into November from -21.9 in October, souring the sentiment and limiting expectations for significant recovery.

In comparison to the same period last year, both indexes are dramatically lower, with consumer sentiment being at -41.9 in Nov 2022 from 1.0 in Nov 2021 and economic expectations at -22.2 in Nov 2022 from 46.6 in Nov 2021, reflecting the depth of the crisis of German economy.

Inflation in Germany is at double-digit levels and at the highest in more than twenty five years, with growing uncertainty about security of energy supply ahead of the winter, adding to fears that the situation may further deteriorate.

According to the series of weakening economic indicators, German economy is likely to slide into recession in late 2022 and early 2023 that has been already forecasted by the government.