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25 Mar 2021 | 08:10

German consumer sentiment improves - GfK

(Sharecast News) - German consumer sentiment is set to improve in April after the easing of the hard lockdown at the beginning of March but a third wave of coronavirus cases and further restrictions are expected to weigh on the mood going forward, according to a survey released by market research group GfK. GfK's forward-looking consumer sentiment index for April rose to -6.2 from -12.7 in March. Analysts were expecting a reading of -12.1. Meanwhile, the economic expectations index printed at 17.7, up from 8.0.

GfK said that while the growing optimism may seem surprising at first glance, since the survey took place between 4 and 15 March, events surrounding the AstraZeneca vaccine and a rise in Covid infections were not taken into account.

"Instead, the survey period was characterised by the initial easing of the hard lockdown and stable or even slightly declining infection figures. A very similar development was also observed in the spring of 2020, when the hard lockdown was also relaxed," GfK said.

"With infection rates rising again and the lockdown will be tightened again, it is questionable whether the improvement in consumer confidence will continue."

GfK consumer expert Rolf B├╝rkl said: "The hard lockdown will severely damage consumer confidence and the current improvement will remain a flash in the pan. A sustained recovery in consumer confidence will continue to be a long time coming - which means difficult times ahead for retailers and manufacturers."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Overall expectations are now almost as high as they were when the economy initially reopened in Q3, while expectations for income and purchasing intentions remain depressed overall.

"Inflation expectations advanced strongly too, likely linked to higher energy inflation, while the willingness-to-save index edged lower. In total, these are solid numbers, consistent with spending rebounding at the end of Q1 after a drop at the start of the year when last year's VAT hike was reversed. We are confident, however, that both the headline and details will weaken in the near-term as new virus restrictions bite."

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