Private consumption in Germany is increasing. Consumer sentiment has improved for the fourth month in a row. There are two main reasons for this.
Germans’ purchasing mood is improving again. Income expectations are rising and the propensity to save is decreasing significantly, according to a new study on the consumer climate in Germany by the Nuremberg research institutes GfK and NIM. Consumer sentiment has thus improved for the fourth time in a row. The indicator rose from minus 24 points to minus 20.9. In a long-term comparison, this still represents a very weak position. Before the corona pandemic, the consumer climate was comparatively constant at plus 10 points.
“Falling inflation rates combined with considerable wage and salary increases are strengthening consumers’ purchasing power,” said NIM consumer expert Rolf Bürkl. “On the one hand, this has a stimulating effect on income expectations and, on the other hand, reduces consumer uncertainty, which was also reflected in the comparatively high propensity to save in previous months,” he stressed. However, the propensity to make larger purchases is still muted and has recently only increased slightly by 0.3 points compared to the previous month.
It can be assumed that consumers are still uncertain and there is a lack of clear prospects for the future. This leads to less planning security when making purchases. “Only when this security returns to people will they be willing to invest their increasing purchasing power in larger purchases again,” said Bürkl.
However, Germans are very confident that the economy will improve. Economic expectations rose sharply by nine points in May.
Around 2,000 people were surveyed for the study between May 2 and 13. The consumer climate by GfK and NIM is part of a Europe-wide study on consumer sentiment commissioned by the EU Commission.
Source: Stern
