BERLIN (Reuters) – German consumer sentiment is set to pick up in June thanks to a decline in the propensity to save, as expected wage rises help to dissipate households’ fears about a loss in purchasing power with inflation, a GfK institute survey showed on Thursday.
The institute’s consumer sentiment index improved to -24.2 heading into June from a slightly revised -25.8 in May, the eighth increase in a row, but slightly below the expectations of analysts polled by Reuters of a reading of -24.0.
“A lower propensity to save has prevented the recovery in consumer sentiment from stagnating this month,” said GfK consumer expert Rolf Buerkl. However, it is still below the low level of spring 2020 during the first Covid-19 lockdown, he added.
Another important support for the slight recovery in consumer confidence is income expectations. The subindex rose to -8.2 from -10.7 the month before, due to expectations of wage increases.
While income expectations have risen for the eighth consecutive month, both the propensity to buy and economic expectations have suffered slight losses.
JUN 2023 MAY 2023 JUN 2022
Consumer climate -24.2 -25.8 -26.2
Consumer climate components MAY 2023 APR 2023 MAY 2022
– willingness to buy -16.1 -13.1 -11.1
– income expectations -8.2 -10.7 -23.7
– business cycle expectations 12.3 14.3 -9.3
NOTE – The survey period was from May 4 to May 15, 2023.
The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.
The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.
(Reporting by Maria Martinez, Editing by William Maclean)
