German consumer sentiment brightens modestly as holiday shopping begins

By Miranda Murray and Maria Martinez

BERLIN (Reuters) -Consumer sentiment in Germany will improve slightly in December as households show more willingness to spend on Christmas gifts and festive celebrations, though less rosy income prospects are preventing a stronger recovery, surveys showed on Thursday.

The consumer sentiment index, published by the GfK market research institute and the Nuremberg Institute for Market Decisions (NIM), rose to -23.2 points for December from -24.1 points the month before, in line with analysts' expectations.

Overall sentiment was boosted by the second consecutive monthly increase - a 3.3-point rise - in consumers' willingness to buy, bringing it to the same level as a year earlier at -6.0 points.

A 2.1-point dip in their readiness to save also helped.

DEC 2025 NOV 2025 DEC 2024

Consumer climate -23.2 -24.1 -23.1

Consumer climate components NOV 2025 OCT 2025 NOV 2024

- economic expectations -1.1 0.8 -3.6

- income expectations -0.1 2.3 -3.5

- willingness to buy -6.0 -9.3 -6.0

- willingness to save 13.7 15.8 11.9

"Consumer sentiment is currently at almost exactly the same level as last year. This is good news for retailers with an eye to year-end business: The data points to stable Christmas sales," said Rolf Buerkl, head of consumer climate at NIM.

"On one hand this shows a certain stability in consumer sentiment but on the other hand, it shows that consumers do not expect a drastic recovery in the short term," he added.

RETAILERS BRACE FOR SUBDUED FESTIVE SEASON

A different survey by the Ifo Institute showed that around one in four companies in the retail sector anticipated business will be poor this Christmas season.

“Retailers' expectations are subdued. Many of them are entering the most important sales period of the year without any great hopes,” said Klaus Wohlrabe, head of surveys at Ifo.

Just under half of the companies expect average business, while only around 10% of retailers are forecasting bumper Christmas sales.

Germany's retail sector expects modest annual growth this holiday season, with sales forecast at 126.2 billion euros ($146.1 billion) for November and December according to the retail association HDE.

HOUSEHOLDS LOOK WITH PESSIMISM INTO NEW YEAR

Households' economic expectations for the next 12 months fell nearly two points month on month, to -1.1 points, but were still 2.5 points higher compared with last year's level, the GfK survey showed.

Germany's economy is expected to grow by only 0.2% in 2025 after two years of contraction as Chancellor Friedrich Merz's spending measures need time to translate into better conditions.

In the case of the Ifo survey focused on retailers, expectations are gloomier than in the previous year: 42.2% of retailers anticipate a worse end to the year than in 2024, while 35% are planning for unchanged sales.

A look at the individual segments shows a gloomy picture across the board, with toy retailers, which otherwise perform strongly in the run-up to Christmas, particularly pessimistic. Around one in two of them expects a worse result.

($1 = 0.8618 euros)

(Reporting by Miranda MurrayEditing by Madeline Chambers and Joe Bavier)