Germany: German consumers turn more positive in May

In May, the mood among German consumers ticked up. The forward-looking consumer confidence indicator published by the GfK Group edged up from April’s 9.4 points to 9.7 points in May, marking the highest reading in eight months. Overall, the GfK commented that, “consumers are clearly assuming that the German economy will regain some momentum in the coming 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 April. Households’ expectations for the overall economy rose notably in April, stabilizing in positive territory. The GfK noted that, “consumers believe that the German economy will continue to grow in the coming months. However, this upturn is expected to be moderate.” Consumers’ income expectations and willingness to buy both also rose markedly in April, coming in at high levels. According to the GfK, income expectations benefited from a slight improvement in the economic outlook and a buoyant labor market, while consumers’ willingness to buy was boosted by the ECB’s loose monetary policy.

FocusEconomics Consensus Forecast panelists expect private consumption to expand 1.8% in 2016, which is unchanged from last month’s estimate. For 2017, panelists see private consumption growing 1.6%.