Germany: German consumers are more optimistic heading into June
May 25, 2016
In June, the mood among German consumers continued to improve. The forward-looking consumer confidence indicator published by the GfK Group inched up from May’s 9.7 points to 9.8 points in June, marking the highest reading in nine months. Overall, the GfK commented that, “consumers still believe that the German economy will continue to grow moderately over the next few months.”
In addition to the overall consumer confidence indicator, which estimates consumer sentiment in the coming month, the GfK elaborates on three sub-indicators, which refer to May. Households’ expectations for the overall economy continued to strengthen in May, moving a bit further into positive territory. The GfK noted that Q1’s strong GDP reading was partly behind the rise in economic expectations. Furthermore, the GfK sees that, “consumers are assuming that the German economy will continue to achieve positive growth, even though the rates of increase are expected to remain rather moderate.” Consumers’ willingness to buy also edged up in May. Conversely, income expectations fell, but still rested at a very high level. In the GfK’s view, income expectations are supported by a solid labor market, new wage agreements, July’s planned increase in the state pension as well as subdued inflation.