German consumer confidence remains largely unchanged heading into April, with the index rising slightly to -24,5 points from -24,6 the previous month, according to GfK and the Nuremberg Institute for Market Decisions (NIM). Analysts had expected a more marked improvement, with a forecast of -22,7 points.
Although economic and income expectations are rising and the propensity to purchase has improved somewhat, the growing tendency to save is hindering a real recovery in consumption. “The elections and the prospect of a new government have reduced the pessimism of some consumers, but the increased propensity to save weighs on the overall picture,” said Rolf Buerkl of the NIM.
Conservative Friedrich Merz is in talks with the Social Democrats to form a new government by Easter, but disagreements remain over issues such as immigration. Parliament approved a record spending package last week to boost the economy and bolster defense, but recovery could take time after Germany's GDP contracted for a second straight year in 2024.
Household income prospects improved in March, halting two months of decline, but it remains unclear whether this marks a real turnaround. The propensity to purchase has also increased, although it remains at lower levels than during the pandemic. The consumer confidence index, which measures private spending for the coming month, suggests that the recovery will be slow and gradual.
