The German stock market opened cautiously on Friday, the final trading day of the week, reflecting persistent anxieties surrounding consumer spending and broader economic health. The DAX index registered around 23,745 points shortly after the opening bell, a marginal decline of 0.1 percent compared to the previous day’s close.
Disappointment amongst traders stemmed from newly released retail sales figures, revealing a 0.3 percent contraction in October compared to September, as reported by the Federal Statistical Office. While sales showed a year-on-year increase of 0.9 percent, the immediate prospect for German retailers entering the crucial fourth quarter appears bleak. “This is a rocky start to the fourth quarter for German retailers” stated Thomas Gitzel of VP Bank, underscoring the lack of positive signals indicating a significant rebound in private consumption during the remainder of the year.
The malaise isn’t confined to October. Private consumption expenditure experienced a similar 0.3 percent decline in the third quarter, directly hindering the overall growth of Germany’s Gross Domestic Product. This contraction reflects a growing trend: rising savings rates fueled by fears of job insecurity. As Gitzel observed, “Private households are preferring to build up emergency funds rather than spending money. Consequently, private consumption is unlikely to see significant jumps in the fourth quarter.
The cautious mood extended to currency markets, with the euro experiencing a slight depreciation. The euro was trading at $1.1577, with the dollar fetching €0.8638. The subdued economic outlook and hesitant consumer confidence are adding to the pressure on the currency, potentially influencing monetary policy decisions in the months ahead. These figures raise critical questions regarding the efficacy of current government strategies aimed at stimulating domestic demand and mitigating the impact of global economic headwinds on Germany’s powerhouse economy.