German consumer confidence improves, but uncertainty remains high

(Sharecast News) - Consumer confidence in Germany rose to its highest mark in seven months as economic expectations reached a two-year high despite overall sentiment remaining "extremely low", according to a survey by NIQ and the Nuremberg Institute for Market Decisions (NIM). The forward-looking consumer climate indicator forecast an increase of just 0.9 points to -19.9 for June. This was the third straight improvement and marked the highest level since November.

But while the index remains firmly higher than the record lows of -42.8 seen in late-2022, it still remains well below the long-term average.

According to NIQ, consumers showed less willingness to spend money in this month's survey, with the gauge for this measure falling 1.5 points to -6.4, even though the income expectations indicator rose 6.1 points to an eight-month high of 10.4. At the same time, the willingness to save measure increased.

"Despite improved income prospects, willingness to buy is not increasing," NIQ said. "Uncertainty caused by the US government's unpredictable customs and trade policy and a rise in unemployment, which is causing many employees to worry about their own jobs, is continuing. This is causing consumer restraint, even though income expectations are currently viewed more positively."

Nevertheless, the economic expectations indicator rose 5.9 points to 13.1, its highest since April 2023. That's despite projections for Germany economic growth to stall this year, before picking up to 1% in 2026.

"The level of consumer sentiment remains extremely low, and consumer uncertainty remains high," said Rolf Bürkl, consumer expert at the NIM.

"The unpredictable customs and trade policy of the US government, turbulence on the stock markets and fears of a third consecutive year of stagnation are reasons why the consumer climate remains weak. In view of the general economic situation, people seem to think it advisable to save," Bürkl said.