Germany’s Oct consumer climate hits highest level since April ’22

Germany’s consumer climate continued to recover in October, according to the latest GfK Consumer Climate report, powered by the Nuremberg Institute for Market Decisions (NIM).

“Following the slight improvement in the previous month, the Consumer Climate continues to improve. It has climbed to its highest level since April 2022, when -15.7 points were measured after the start of the war in Ukraine,” Rolf Bürkl, consumer expert at NIM, said.

This improvement is driven by increased income expectations and a higher willingness to buy, despite a slight decline in the willingness to save. However, the level of Consumer Climate still remains low.

The consumer climate forecast for November is set to rise by 2.7 points to -18.3 points.

Bürkl added that while the consumer climate is improving, it remains at a low level due to ongoing uncertainties from crises, wars, and rising prices. These factors are hindering the full impact of real income growth on consumption.

However, economic expectations among German consumers continue to decline, with the economic indicator dropping slightly to 0.2 points. The German government has also revised its economic growth forecast downwards, predicting a 0.2 percent fall in GDP for the year.

On a positive note, income expectations have risen for the second consecutive month, with the indicator climbing to 13.7 points. This increase is attributed to falling inflation rates and rising wages, leading to significant real income growth for households and pensioners.

The willingness to buy has also reached its highest level since March 2022, standing at -4.7 points. Despite this upward trend, concerns about unemployment and company insolvencies may impact consumer sentiment in the coming months.