German consumer climate improves in May – research

Consumer sentiment in Germany improved for the fourth consecutive month in May, market research company GfK reported on Wednesday.

The GfK Consumer Climate indicator, published by GfK and the Nuremberg Institute for Market Decisions (NIM), rose to -20.9 points in June, up 3.1 points from May’s revised -24.0 points.

This recovery was primarily driven by a significant drop in the willingness to save, which fell nearly 10 points to 5.0 points, the lowest since August 2023.

Income expectations continued their upward trend for the fourth month in a row, rising 1.8 points to 12.5 points in May, over 20 points higher than the same period last year.

This optimism is supported by rising wages, salaries, and public pension benefits, along with a falling inflation rate of 2.2 per cent in April, close to the European Central Bank’s target.

However, the willingness to buy remained almost unchanged, increasing only 0.3 points to -12.3 points in May. This stagnation reflects consumers’ reluctance to make major purchases due to high energy and food prices and ongoing economic uncertainties.

Economic expectations saw a significant rise for the fourth month in a row, with the economic sentiment indicator increasing by 9.1 points to 9.8 points in May, indicating growing hopes for a recovery in the German economy throughout the year.