German GfK Consumer Confidence To Drop In July

(RTTNews) - German consumer confidence is set to drop in July after rising for three straight months as rising willingness to save offset the positive impetus provided by improved income prospects.

The forward-looking consumer sentiment index fell unexpectedly to -20.3 in July from -20.0 in the previous month, a survey jointly published by the market research group GfK and the Nuremberg Institute for Market Decisions showed Thursday. The score was seen at -19.1.

The savings indicator rose 3.9 points to 13.9 in June, which was the highest level in more than a year.

"A high willingness to save among consumers is also an expression of their continuing uncertainty and thus a lack of planning security," NIM Consumer Expert Rolf Burkl said.

"The latter is particularly important for consumers when it comes to larger purchases or expenses," said Burkl. "That is why the willingness to buy also suffers slight losses this month."

ING economist Carsten Brzeski said consumer sentiment remained muted as the government's fiscal plans are mainly aimed at businesses, not households.

The survey showed that income expectations remained clearly on track for recovery. The income indicator rose for the fourth straight month in June. The corresponding index gained 2.4 points to 12.8.

The recent favorable wage agreements combined with a moderate inflation underpinned income expectations. The GfK said the improvement in wages helped to boost purchasing power.

Willingness to buy rose very moderately in June. The corresponding index climbed 0.2 points to -6.2. The score suggested that willingness to buy failed to benefit from the significant rise in income expectations.

Consumers were cautious about US government's continuing unpredictable policies, particularly on customs and trade issues. Consequently, consumers adopted a wait-and-see attitude. The economy is expected to recover in the course of 2025. The economic expectations index surged to 20.1 in June from 13.1 in May. The latest score was the highest since the outbreak of the war in Ukraine in early 2022.

The survey was conducted by NIM on behalf of the European Commission. Survey results are based on around 2,000 consumer interviews carried out between May 30 and June 11.