BERLIN (Reuters) – German consumer sentiment is set to pick up in May as moderating energy prices and expected wage increases help to dissipate households’ initial fears about a loss in purchasing power, a GfK institute survey showed on Wednesday.
The institute’s consumer sentiment index improved to -25.7 heading into May from a slightly upwardly revised -29.3 in April, the seventh increase in a row and above expectations of analysts polled by Reuters of a reading of -27.9.
Sentiment is back on track to recovery after a slowdown last month, but “the value still remains below the pre-pandemic level of about three years ago,” said GfK consumer expert Rolf Buerkl.
“On a more positive note, income expectations are also up for the seventh consecutive month, returning to pre-Ukraine war levels for the first time,” added Buerkl.
The income expectations subindex rose to -10.7 from -24.3 the month before, marking the highest value since February 2022, and comes as workers press for more pay and better working conditions to tackle higher costs of living through strikes.
MAY 2023 APR 2023 MAY 2022
Consumer climate -25.7 -29.3 -26.6
Consumer climate components APR 2023 MAR 2023 APR 2022
– willingness to buy -13.1 -17.0 -10.6
– income expectations -10.7 -24.3 -31.3
– business cycle expectations 14.3 3.7 -16.4
NOTE – The survey period was from March 30 to April 11, 2023.
The consumer climate indicator forecasts the development of real private consumption in the following month.
An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.
The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”
The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.
The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.
(Reporting by Miranda Murray, Editing by Rachel More and Friederike Heine)
