German GfK Consumer Confidence Set To Improve In June

(RTTNews) - German consumer sentiment is set to improve in June driven by rising income expectations and willingness to buy but the war in the Middle East continues to cloud the outlook, latest results of the NIM Consumer Climate powered by GfK showed Friday.

The consumer confidence index rose unexpectedly to -29.8 points in June from -33.1 points in May. The score was expected to fall to -33.7.

"Consumer Climate has, at least for the moment, ended its downward trend and is recovering somewhat this month," NIM head of consumer climate Rolf Bürkl said.

Although the significantly improved income outlook, a decreasing willingness to save and a slightly increasing willingness to buy supported the consumer climate, the negative impact of the conflict in the Middle East remains largely unchanged and is still visible, Burkl said.

Income expectations recovered notably in May with the corresponding index rising 11.4 points to -13.0. Nonetheless, the income expectations index remained clearly in the pessimistic range compared to pre-crisis levels.

As the conflict in the Middle East has not escalated further so far and potential relief measures from the government contributed to the improvement in households' income expectations.

The willingness to buy index rose to -13.2 from -14.4 in April. However, willingness to buy remained gloomy and consumers still think it is not advisable to make major purchases. The willingness to save, which indicates whether people currently consider saving advisable under general economic conditions, declined for the third straight month in May. The index dropped 2.2 points to 13.9 in May.

Despite an improvement in the economic expectations index, the majority of consumers still expect the economic situation to deteriorate over the coming twelve months. The economic expectations index climbed to -11.2 in May from -13.7 in the prior month. Consumers expect prices to rise over the coming twelve months but the indicator dropped 5.4 points to -0.4 in May. The decline reflects the reduction in the energy tax on diesel and gasoline.