German consumer sentiment continued its downward trend in August, according to recently released data. The GfK Consumer Climate index fell to -23.6 points, a decrease of 1.9 points from the revised figure of -21.7 in July.
Key drivers of this decline were significantly diminished income expectations and a slight reduction in consumers’ willingness to make major purchases and save. While the propensity to save saw only a marginal decrease, falling 0.6 points to 15.8, income expectations experienced a more substantial drop.
Rolf Bürkl of the Nuremberg Institute for Market Decisions (NIM), involved in the index calculation, stated the results indicate a clear “summer slump” in consumer confidence. A key factor contributing to the declining income outlook is growing concern regarding job security.
Recent figures show a rise in registered unemployment, exceeding three million in August – a threshold experts previously anticipated. Pessimism regarding employment prospects also increased noticeably among consumers, with the indicator tracking expectations for unemployment reaching its highest point this year. This concern is prompting caution among consumers regarding significant purchases, further diminishing hopes for a substantial recovery in consumer sentiment in the near term.
Following five consecutive months of increases, income expectations suffered a considerable setback in August, losing 11.1 points to reach 4.1 – the lowest level since March 2025. Alongside job insecurity, ongoing uncertainty surrounding future consumer price developments is also likely influencing this decline.
Geopolitical factors and the trade policies of the US administration are fueling anxieties about potential increases in energy prices, leading to a second consecutive monthly rise in German consumers’ inflation expectations.
The willingness to purchase also declined this month, though to a lesser extent than income expectations, easing by 0.9 points to -10.1 – the lowest since February 2025.
Expectations regarding the overall economic outlook also continued to weaken. The economic outlook indicator fell noticeably for the second consecutive month, decreasing by 7.4 points to 2.7 – the lowest level in six months. This suggests consumer hopes for a German economic recovery in the remainder of the year are diminishing.
