Consumer sentiment in Germany improved in July. The European Football Championship may have triggered a one-off effect.
According to the latest study on consumer sentiment, the mood of German consumers improved significantly in July. Expectations regarding income are increasing significantly, economic expectations and the inclination to make major purchases are increasing at least moderately, according to the study by the Nuremberg institutes GfK and NIM.
Index climbs
The consumer climate index climbed by more than three points to -18.4 points compared to the previous month. However, this is still a very poor value in a long-term comparison. Before the Corona pandemic, the consumer climate was comparatively stable at +10 points.
“The improvement in the consumer climate in July is primarily due to the increased income expectations of Germans. But it is very likely that the European Championship euphoria that the European Football Championship in Germany triggered in many parts of the population also played a role,” said Rolf Bürkl, consumer expert at NIM. “However, it remains to be seen whether this effect is sustainable or just a short-term flare-up.”
If the improvement in the consumer climate turns out to be a flash in the pan, the road out of the slump will be long and arduous. A large proportion of German households are currently seeing real income growth through salary increases and a slight drop in inflation.
Planning security for purchases necessary
In addition, however, planning security must return for consumers in order to improve the inclination to make larger purchases. Due to the better income prospects, this component also improved by 4.6 points in July – a higher value was last measured in March 2022. But the euphoria could quickly fade again, consumer experts fear. With regard to the economy, Germans’ assessments are cautious. According to experts, an economic recovery will only accelerate in the coming year.
Source: Stern
