Press release The next GfK Consumer Climate report will be published on December 19, 2014, 8.00 a.m.

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1 Press release The next GfK Consumer Climate report will be published on December 19, 2014, 8.00 a.m. November 27, 2014 Rolf Bürkl T konsumklima@gfk.com Ursula Fleischmann Corporate Communications T ursula.fleischmann@gfk.com German consumer climate improves as year draws to a close Findings of the GfK Consumer Climate study for Germany for November 2014 Nuremberg, November 27, 2014 Overall, German consumers' mood continued to stabilize in November. The consumer climate is improving as the year draws to a close. Following a value of 8.5 points in November, the overall indicator is forecasting 8.7 points for December. Income expectations and willingness to buy increased for the second consecutive month, while a marginal decline was recorded for economic expectations. There is greater uncertainty among German consumers as a result of the persistently tense geopolitical situation coupled with the economic slowdown in the eurozone. This is reflected in the deteriorating economic outlook. However, consumers' income outlook and spending propensity have not yet been affected by these developments. Both indicators once again recorded a second consecutive improvement on their already extremely high level. Economic expectations: continue to deteriorate Counter to the hope still held last month, the economic outlook of German consumers did not continue to stabilize. Economic expectations dropped by 2.7 points and now stand at 1.6 points. The indicator is therefore still slightly above the long-term average of zero points. A lower value was last recorded in June 2013, when it fell to 1.1 points. GfK SE Nordwestring Nuremberg Germany T Management Board: Matthias Hartmann (CEO) Christian Diedrich (CFO) Dr. Gerhard Hausruckinger Debra A. Pruent Chairman of the Supervisory Board: Dr. Arno Mahlert Commercial register Nuremberg HRB The German economy is now also beginning to suffer the effects of the various international crises in Iraq, Syria and Ukraine as well as the Ebola epidemic in West Africa and, linked to this, the economic weakness in the eurozone. Consequently, a significant downward correction of the growth forecast for German gross domestic product (GDP) was required in recent weeks. In line with the German government, the German Council of Economic Experts also lowered its prediction for economic growth this year to just 1.2 percent in its recently published Annual Economic Report. Just over a year ago, the German Council of Economic Experts had still been forecasting 1.9 percent. The German economy is currently stagnating and economic experts are only anticipating it to recover over the course of next year. Accordingly, the estimate for next year's growth prospects is also very conservative, at 1.0 percent. 1

2 In contrast, German companies feel the economic downturn has come to an end. Following six consecutive declines, the Ifo Business Climate index improved again in November. Income expectations: further increase on already high level With regard to their own income outlook, Germans were not affected by the sluggish economy in November. Income expectations increased slightly for the second consecutive time and climbed to 48.5 points, which is an increase of 1.6 points in comparison with the previous month. At first, this development might seem surprising, but it is less unexpected considering the situation on the labor market. Month after month, employment is rising to new record highs. Income from wages and salaries is rising in the wake of extremely good employment levels. Pensioners have also seen an improvement in their state pension. As a result of the extremely low rate of inflation, salary and pension increases are making a real difference to Germans' financial situation. Willingness to buy: in line with income expectations In November, the development of willingness to buy virtually matched that of income expectations. Following an increase of 1.9 points, the indicator value increased to 47.5 points and therefore consolidated its already good position. The reasons for the good spending mood remain the same as in previous months. The stable labor market continues to boost planning security for making major purchases. Germans are no longer especially concerned that they will lose their jobs. A further factor to consider is the falling price of crude oil, which is also having a positive knock-on effect on energy prices. Fuel is cheaper now than it has been for four years. The price of heating oil is also on a downward trend. This eases the burden on private household budgets, meaning that a greater share of income is available for other uses, which is likely to provide an additional boost to the consumer mood. Consumer climate: upward trend continues Following a value of 8.5 points in November, the forecast for the overall indicator has increased to 8.7 points for December. The consumer climate is therefore continuing its moderate upward trend. The consumer climate continues to be a pillar of strength for the generally sluggish economic climate. According to the Federal Statistical Office, the fact that GDP was able to at least record a slight increase of 0.1 percent in the third quarter is attributable to the considerable increase in private household spending. German consumers therefore prevented their economy from sliding back into recession. 2

3 For consumption to remain a key pillar of the economy, it is essential that the situation in international crisis regions does not escalate further. This also means that the West African countries which are affected by Ebola and the international community must get a grip on the crisis. The spread of Ebola to Europe would represent a considerable risk for positive economic development in Germany in future. The following table shows the development of the individual indicators in November in comparison with the previous month and prior year: November 2014 October 2014 November 2013 Economic expectations Income expectations Willingness to buy Consumer climate The following graph shows the development of the consumer climate indicator over the past few years: GfK Consumer Climate indicator (as at: November 2014) Intended publication dates for 2014: Friday, December 19, 2014, 8.00 a.m. 3

4 About the study These findings are extracts from the GfK Consumer Climate MAXX survey, which is based on around 2,000 consumer interviews conducted each month on behalf of the European Commission. The report contains charts, forecasts and a detailed commentary regarding the indicators. In addition, the report includes information on proposed consumer spending in 20 different areas of the consumer goods and services markets. The GfK Consumer Climate survey has been conducted since The consumer climate explicitly refers to all private consumer spending. However, depending on the definition, only 30 percent of private consumer spending is accounted for retail. The remainder is attributable to services, travel, rent, health services and the entire personal care segment. GfK is predicting a rise in private consumption of 1.5 percent for Again, this does not relate to just retail sales, but to all consumer spending. Last year, GfK forecast that private spending would increase by 1.0 percent. According to figures from the Federal Statistical Office, private spending grew by 0.9 percent in 2013, which means GfK's prediction was almost spot-on. Willingness to buy is a mood indicator, as are all the other indicators. It examines whether consumers think it is advisable to make major purchases at present. Even if they answer "yes", two further requirements need to be fulfilled for a purchase to be made: consumers must have the money that is required for such a major purchase and also regard this acquisition to be necessary. In addition, it only relates to consumer durables, which require a greater budget. The findings of the consumer climate survey based on around 2,000 interviews conducted each month on a representative sample of the German population. This survey tool is subject to continuous quality controls, especially in relation to the representativeness. The fact that the results are used and recognized in the field of empirical legal research (for example, the likelihood of confusion between products) is a testament to the exceptionally high quality of this survey. This means that the results are quality approved by experts and must stand up in court. Further information: Rolf Bürkl, Tel , konsumklima@gfk.com 4

5 The table below provides an overview of the following indicators: Economic expectations Income expectations Consumption and buying willingness Consumer climate This index is based on the following question to consumers: How do you think the general economic situation will develop in the next 12 months? (improve stagnate deteriorate) This index is based on the following question to consumers: How do you think the financial situation of your household will develop in the next 12 months? (improve stagnate deteriorate) This index is based on the following question to consumers: Do you think it is advisable to make major purchases at the moment? (good time neither good nor bad time bad time) This index is used to describe private consumption. Key factors are income expectations, buying willingness and savings trends. The economic outlook has a more indirect effect on the consumer climate, generally as a result of income expectations. About GfK GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. For more information, please visit or follow GfK on Twitter: Responsible under press legislation: GfK SE, Corporate Communications Jan Saeger Nordwestring Nuremberg T public.relations@gfk.com 5