Consumer sentiment in Germany improved this month. According to GfK and the NIM Institute, this noticeable rise in the “Consumer Climate” Index is primarily attributed not only to a slight decrease in the inclination toward saving but also to significantly increased income expectations.
The outlook for the economy also became slightly more optimistic this month, even as the willingness to purchase remained nearly unchanged. Specifically, the relevant index increased by 2.8 points, now standing at -26.6 points (revised from -29.4 points for the previous month).
The indicator for economic expectations rose by 2.4 points to the current level of -3.9 points, marking the fourth consecutive increase. Rolf Bürkl of the NIM Institute noted, “Although the economic outlook in late summer is still more than six points below the corresponding year-ago level, the fourth consecutive rise shows a slight upward trend.” He further added that signals from the business sector are generally positive, citing the fact that gross domestic product (GDP) performed better than expected in the second quarter of this year (+0.3 percent), as well as a slight improvement in business mood, with the Ifo Index rising for the third consecutive time between May and July, and the purchasing manager index currently signaling slight expansion.
Following the pause observed last month, income expectations resumed their recovery during the late summer. This indicator climbed by 16.2 points, currently at 1.7 points, which is the highest value recorded in half a year.
However, the propensity to purchase was unable to benefit from the surge in income expectations. The indicator remained virtually unchanged at -9.8 points compared to the previous month. Consumer spending habits have now been stuck around the -10-point mark for about four years and appear to be entrenched.
In contrast, the willingness to save remains at a notably high level even in the late summer. The saving indicator decreased slightly by 1.5 points, currently measuring 15.5 points. The study authors indicated that this means the inclination to save is approximately at last year’s level.
