The German market research group GfK and the Nuremberg Institute for Market Decisions (NIM) have revealed in a recent survey that consumer sentiment in Germany is likely to continue improving at a slow pace. This is due, in part, to the anticipation of an economic rebound in the second half of the year.
According to the survey, the advance consumer confidence index increased to -27.4 in April, an improvement from -28.8 in March. However, this figure still fell slightly short of the projected score of -27.9.
In March, both economic and income expectations saw minor improvements. By contrast, consumer willingness to purchase remained virtually the same. The propensity to save was a notable contributor to overall consumer confidence. Despite a decline of five points, the saving index maintained a significantly high figure of 12.4.
NIM Consumer Expert Rolf Burkl highlighted the slow and gradual progression of the consumer climate recovery. To achieve lasting economic recovery, he argued, inflation needs to decrease and a definitive political strategy is required for planning the upcoming year's financial development.
In March, the economic expectations index climbed by 3.3 points, reaching -3.1. However, the market research group suggested that the economy is still without lasting momentum, with a minor recovery anticipated only for the second half of the current year.
This forecast is thought to be bolstered by the European Central Bank's projected mid-year interest rate reduction. The income expectations indicator, consequently, gained 3.3 points in March, rising to -1.5. This is the best figure reported since February 2022 before the onset of the war in Ukraine.
The slight uptick in income optimism is suggested to be a reflection of collective wage and salary hike developments, as identified by the GfK. Consumer propensity to spend, on the other hand, continues to trail behind income growth, with the corresponding index decreasing to -15.3 from a previous -15.0 in February. The GfK interprets this low propensity to purchase as indicative of extreme uncertainty amongst consumers, tending to conserve their financial resources as a result.
