German Consumer Confidence To Improve Slightly In June: GfK

(RTTNews) - Germany's consumer confidence will strengthen in June as households were more positive about their income growth amid the hope of a rise in wages and salaries resulting in a less severe loss of purchasing power.

The consumer confidence index rose to -24.2 in June from a revised -25.8 in May, survey results from the market research group GfK showed Wednesday. The score was below economists' forecast of -24.0.

Although consumer sentiment improved for the eighth month, the June reading points a rather mixed picture, the GfK said.

Income expectations continued its recovering trend, while both the propensity to buy and economic expectations have suffered slight losses.

"Consumer sentiment is not showing a clear upward trend at the moment," Rolf Burkl, GfK consumer expert, said.

"As a result, the increase in the consumer climate has slowed down again."

Further, the sentiment is still below the level of spring 2020 during the first corona breakdown.

The income expectations index rose to -8.2 in May from -10.7 in April. There is a more optimistic mood mainly due to expectations of a significantly higher, collectively agreed income growth.

Nonetheless, the still very low consumer climate indicates a very limited contribution from private consumption to Germany's economic growth.

Revised GDP data for the first quarter released on Thursday showed that the biggest euro area economy slid into a technical recession in the first quarter as consumption shrunk amid high inflation.

The propensity to buy did not contribute positively to this month after improving in the previous months. The corresponding index dropped by 3 points to -16.1.

Consumers continue to be extremely reluctant to make purchases as they are unsettled by the high cost of living.

Although a recession will probably be avoided this year, a noticeable recovery in the economy also seems a long way off, the GfK said.