German consumer sentiment recovers further heading into June

BERLIN (Reuters) – German consumer sentiment improved for the fourth month in a row heading into June as the outlook brightened somewhat in Europe’s biggest economy and income expectations rose, a survey showed on Wednesday.

The consumer sentiment index rose by 3.1 points to -20.9 points heading into June from a revised -24.0 the month before. It was above expectations of analysts polled by Reuters for a -22.5 reading.

An improved willingness to buy and less appetite to save boosted the index, published jointly by the GfK institute and the Nuremberg Institute for Market Decisions (NIM).

“Falling inflation rates combined with respectable wage and salary increases are boosting consumers’ purchasing power,” said Rolf Buerkl, consumption expert at NIM.

“Nevertheless, there still seems to be uncertainty among German consumers,” he said, adding that they were lacking the clear economic prospects needed to invest in larger purchases.

JUN 2024 MAY 2024 JUN 2023

Consumer climate -20.9 -24.0 -24.2

Consumer climate components MAY 2024 APR 2024 MAY 2023

– willingness to buy -12.3 -12.6 -16.1

– income expectations 12.5 10.7 -8.2

– business cycle expectations 9.8 0.7 12.3

NOTE – The survey period was from May 2-13, 2024.

The consumer climate indicator forecasts the progress of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects respondents’ assessment of the general economic situation over the next 12 months.

(Reporting by Friederike Heine, Editing by Rachel More)