German consumer sentiment stabilizes at low level in March, finds GfK

BERLIN (Reuters) – German consumer sentiment is expected to stabilize at a low level in March as households are confronted with great uncertainty due to constantly rising prices and a weaker outlook for Europe’s largest economy, a survey showed on Tuesday.

The consumer sentiment index published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM) rose slightly heading into March, to -29.0 from a revised -29.6 the month before, in line with a forecast by analysts polled by Reuters.

“There is great uncertainty among consumers. In addition to the constantly rising prices, the weaker economic forecasts for the German economy this year are likely to be another important reason for this,” said Rolf Buerkl, consumer expert at the NIM.

The German government recently slashed its economic growth outlook for this year to just 0.2% from 1.3% previously.

“For the time being, Germany must continue to wait for an economic recovery,” he said, which means a rapid recovery in consumer spending is not in sight.

Despite February income expectations increasing to their highest value since February 2022 – before the war in Ukraine broke out – consumers’ willingness to buy was still extremely low as households remain cautious about making major purchases.

MAR 2024 FEB 2024 MAR 2023

Consumer climate -29.0 -29.6 -30.6

Consumer climate components FEB 2024 JAN 2024 FEB 2023

– willingness to buy -15.0 -14.8 -17.3

– income expectations -4.8 -20.0 -27.3

– business cycle expectations -6.4 -6.6 6.0

NOTE – The survey period was from Feb. 1-12, 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 Miranda Murray, Editing by Rachel More)