Market Analysis

German consumer sentiment showed improvement for the fourth consecutive month heading into June, driven by brighter economic outlook and increased income expectations, according to a survey released on Wednesday.

The consumer sentiment index rose by 3.1 points to -20.9 in June from a revised -24.0 in the previous month, surpassing analysts' expectations of -22.5, as reported by Reuters.

The joint survey by the GfK institute and the Nuremberg Institute for Market Decisions (NIM) indicated a strengthened willingness among consumers to make purchases and a reduced inclination to save, which boosted the overall index.

Rolf Buerkl, a consumption expert at NIM, attributed the improved sentiment to declining inflation rates and notable wage increases, which have bolstered purchasing power. However, he noted lingering consumer uncertainty, particularly regarding economic prospects, which has tempered enthusiasm for larger purchases.

The survey conducted from May 2-13, 2024, serves as an indicator of real private consumption trends for the following month. A reading above zero suggests year-on-year growth in private consumption, while a negative value indicates a decline compared to the same period a year earlier.

According to GfK, each one-point change in the indicator corresponds to a 0.1% change in year-on-year private consumption. Key components include the "willingness to buy" indicator, reflecting sentiments on major purchases, and the income expectations sub-index, gauging household financial outlook over the next 12 months.

Paraphrasing text from "Reuters" all rights reserved by the original author.