Consumer sentiment in Germany is continuing its slow recovery, according to the July HDE Consumption Barometer published by the Handelsverband Deutschland (HDE). The index, which reflects expected consumer behaviour over the coming three months, has reached its highest level in a year, marking a cautious yet persistent upward trend.
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'Consumer sentiment in Germany continues to improve,' the HDE reports. However, the improvement remains moderate: 'Although the index is only rising slowly, it has reached its highest level in a year.'
While the general outlook remains positive, the latest data suggest that a significant rebound in private consumption is unlikely in the near term. One of the key dampening factors is a drop in consumers' willingness to make major purchases compared to the previous month. Despite this, households appear to be planning to reduce their saving efforts and rely more on existing reserves.
The shift in consumer spending and saving behaviour is believed to stem from growing concerns over personal income expectations. The HDE notes: 'Their expectations regarding the further development of their own income situation have deteriorated significantly compared to the previous month.' Optimism seen in the previous month appears to have faded, possibly due to the German government's relief measures being announced but not yet implemented.
Nonetheless, consumers remain hopeful regarding the broader economic outlook: 'Consumers continue to view the economic situation with optimism.'
Despite reaching its strongest level since July 2024, the recovery in consumer sentiment remains tentative. 'For a rapid recovery in private consumption, consumers are still acting too cautiously; the restraint in spending is still noticeable,' the barometer states. Consequently, a broader macroeconomic boost from household spending is not expected in the short term.
The HDE Consumption Barometer, compiled monthly by the Handelsblatt Research Institute (HRI) on behalf of the HDE, surveys 1,600 individuals on purchasing intention, saving behaviour, financial expectations and other consumption-related indicators. Released on the first Monday of each month, the index forecasts anticipated sentiment rather than current behaviour.
As Germany continues its gradual economic recovery, consumer confidence appears to be stabilising, but for now, the rebound is more emotional than economic.
More information:
Handelsverband Deutschland
www.einzelhandel.de
