Germany: Consumer sentiment expected to rise but to remain pessimistic in April
The GfK consumer climate index is expected to rise to minus 6.2 in April from March’s minus 12.7, with sentiment benefitting from the easing of the hard lockdown in early March. It should be noted that the survey was conducted prior to the 23 March announcement that the lockdown will be extended, and prior to a recent rise in infections.
Backward-looking data for March, which is released at the same time and underpins the April estimate, showed a broad-based improvement. Economic expectations continued their upward trend and reached a six-month. This was underpinned by consumers’ assumptions of an economic recovery in the country, following the initial easing of the hard lockdown. In turn, income expectations rose strongly and climbed to a 12-month high due to the reopening of a significant part of the retail sector and the expectations of the scaling-back of short-time working schemes. Fear of job loss also reduced somewhat. Similarly, propensity to buy rose in the month.
Rolf Bürkl, consumer expert at GfK, commented:
“The hard lockdown will severely damage consumer confidence and the current improvement will remain a flash in the pan. A sustained recovery in consumer confidence will continue to be a long time coming — which means difficult times ahead for retailers and manufacturers. […] A fundamental and sustainable improvement in the propensity to consume is only possible with further extensive easing in the retail and services sectors. Due to rising infection rates, it is not currently expected that such easing will occur. On the contrary, it is very likely that restrictions will be tightened again. This would cause a setback in the propensity to consume. The upturn in consumption would be further delayed.”