Recovery in consumer sentiment in Germany ‘making slow progress’

Consumer sentiment in Germany is recovering, albeit slowly, new data from GfK and the Nuremberg Institute for Market Decisions (NIM) has found.

According to the two groups, economic and income expectations are showing a slight improvement, but the propensity to buy remains relatively unchanged at a low level. At the same time, the decreasing propensity to save is contributing positively to the consumer climate indicator.

As a result, the consumer climate has improved for the second consecutive month in a row. In its April forecast, the GfK Consumer Climate powered by NIM indicator has slightly increased by 1.4 points to -27.4 points compared to the previous month (revised from -28.8 points).

Sluggish recovery

“The recovery of the consumer climate is progressing slowly and only very sluggishly,” commented Rolf Bürkl, consumer expert at NIM . “Real income growth and a stable labor market are in themselves very good conditions for a rapid recovery of the consumer economy, but consumers still lack planning security and optimism for the future.

“The strong uncertainty of consumers in times of multiple crises, coupled with little confidence in Germany’s economic development, is inhibiting the propensity to consume. This ensures that impulses from domestic demand for the economy are currently still lacking. In short: the bad mood overshadows the facts.”

According to GFK, this sentiment means that a sustainable recovery of the German economy may be a while in coming, and will require a lowering of the currently-high uncertainty levels among consumers.

However, this will require ‘a further decline in inflation in Germany and a clear political strategy for the country’s further development in the coming years,’ GfK noted. ‘This is the only way consumers can regain more planning security, which is an important prerequisite for investing in major purchases.’

Read more: More than three fifths of Germans fear a ‘deterioration’ of the economy

Income expectations

Income expectations rose by 3.3 points, to currently stand at -1.5 points while the ‘propensity to buy’ indicator stands at -15.3 points, having fallen 0.3 points. Elsewhere, economic expectations increased slightly by 3.3 points to -3.1 points, however this is 6.8 points lower than at the same time last year.

The survey period for the current analysis was from February 29 to March 11, 2024. The results are an excerpt from the GfK Consumer Climate powered by NIM study, and are based on around 2,000 consumer interviews conducted on behalf of the EU Commission every month.