German consumer sentiment continues its gradual recovery, according to the latest GfK Consumer Climate powered by NIM report. While confidence remains at historically low levels, key indicators such as income expectations and the willingness to buy have risen noticeably, signalling a cautious optimism among consumers.
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The Consumer Climate indicator forecasts an increase of 3.7 points to -20.6 for May 2025, up from a revised -24.3 in April. This reflects improvements in income expectations and a reduction in consumers' willingness to save. 'In addition to rising income expectations and a growing willingness to buy, a noticeable decline in the willingness to save is currently strengthening the recovery in the Consumer Climate,' the report states.
The savings indicator dropped sharply by 5.4 points in April, down to 8.4. According to Rolf Bürkl, consumer expert at the Nuremberg Institute for Market Decisions (NIM), 'The realignment of the US administration's trade policy, which began with the announcement of sharp tariff increases shortly before the start of the survey in early April, has apparently not yet had lasting impacts on consumer sentiment in Germany. Any negative effects are likely to be mitigated by the successful conclusion of coalition negotiations and the imminent formation of a fully functioning government.'
'It is clearly more important to German consumers at present that a government will be formed quickly,' Bürkl continued. 'As a result, a key driver of previous uncertainty has lost significance – and the willingness to save has declined accordingly. We know from our in-depth analyses that uncertainty is a major reason for the high willingness to save.'
Income expectations rise sharply
Income expectations saw the most significant improvement, rising 7.4 points to 4.3 – the highest level since October 2024. However, it still represents a 6.4-point decrease compared with April last year. This improvement is partly attributed to a recently concluded collective bargaining agreement for public sector workers. The agreement will see federal and municipal employees receive a three percent salary increase as of 1 April 2025, with a minimum increase of EUR 110 per month, followed by a further 2.8 percent rise in May 2026. This 'exceeds the currently expected inflation rate of just over two percent, which should benefit purchasing power.'
Willingness to buy also climbs
The willingness to buy increased for the second month running, up 3.3 points to -4.9. Compared to April 2024, this represents a rise of 7.7 points. Although still subdued, the trend has been upward since early 2023. The continuation of this recovery hinges on inflation remaining close to the European Central Bank's two percent target and stability in global trade relations.
Modest rise in economic expectations
Economic expectations in April edged up for the third consecutive month, rising 0.3 points to 7.2. While this suggests resilience amid volatile stock markets and international trade tensions, Germany is now projected to enter its third consecutive year of recession—an unprecedented development in the country's post-war history.
The data is based on a survey conducted between 3 and 14 April 2025, involving around 2,000 participants. The next update of the GfK Consumer Climate powered by NIM is scheduled for release on 27 May 2025.
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