German consumer sentiment improves in August – GFK

German consumer sentiment forecast for August shows a notable recovery, with the GfK Consumer Climate index rising by 3.2 points to -18.4, up from a revised -21.6 in July, according to a survey published jointly by GfK and the Nuremberg Institute for Market Decisions (NIM).

The survey released on Wednesday showed that the improvement is driven by significant gains in income expectations and a moderate increase in the willingness to buy, although the willingness to save remains unchanged.

Income expectations for the next 12 months climbed by 11.5 points to 19.7, the highest level since October 2021. This increase follows a slight drop in inflation to 2.2 per cent in June and notable wage and pension hikes, leading to real income growth for many Germans.

The willingness to buy also improved, rising by 4.6 points to -8.4, its best level since March 2022, partly attributed to the positive impact of the European Football Championship. Despite this, willingness to buy remains below levels seen during the pandemic lockdowns.

Economic expectations have only slightly recovered, with the indicator rising by 7.3 points to 9.8, matching the value from May 2024.

Experts forecast only weak GDP growth for 2024, reflecting cautious optimism about the economy’s recovery. Rolf Buerkl from NIM highlighted the need for continued income growth and planning security for sustained consumer sentiment improvements.