Germany: Consumer sentiment expected to edge up but to remain pessimistic in March
February 25, 2021
The GfK consumer climate index is expected to rise to minus 12.9 in March from February’s minus 15.5, as sentiment has begun to recover from the blow it received at the turn of the year due to tighter lockdown measures around Christmas.
Backward-looking data for February, which is released at the same time and underpins the March estimate, showed a broad-based improvement. Economic expectations turned rosier as the outlook is brightened by the fact that a substantial part of the economy has been unmoored by renewed restrictions, while consumers expect a notable portion of the economic loss of last year to be recovered this year. Firming Chinese demand has been particularly highlighted as a source of optimism. In unison, income expectations also rose as hopes of an end to the lockdown fueled expectations of increasing incomes, in part due to the anticipated reversal of short-term work schemes. Propensity to buy rose as well, likely signaling pent-up demand waiting to be unleashed. Lastly, the headline reading also benefited from a drop in propensity to save.
Rolf Bürkl, consumer expert at GfK, commented:
"Consumers are recovering to some extent from the shock they suffered after the tough lockdown in mid-December. The recent dip in infection rates and the launch of the vaccination program are fueling hopes of a speedy easing of measures. [But] consumer sentiment in Germany will only recover sustainably when the strict lockdown ends and shops, hotels and restaurants reopen. If, on the other hand, the measures are extended once again, the chances of a swift recovery will disappear and consumer sentiment will face further tough times ahead."
Author: Jan Lammersen, Economist