German consumer sentiment has continued its recovery in April, according to the GfK Consumer Climate survey released on Tuesday. Income expectations and purchasing intentions have both experienced noticeable growth, while economic expectations have only improved slightly. The savings inclination has also significantly decreased, supporting the consumer climate: The indicator predicts an increase of 3.7 points to -20.6 points in May 2025 compared to the previous month (revised -24.3 points).
“US administration’s new trade policy reorientation, which began with the announcement of significant tariff hikes at the beginning of April, has apparently not yet had a lasting impact on the mood of German consumers” said Rolf Bürkl, consumer expert at NIM, who participated in the study. “Most likely, any negative effects will be compensated by the conclusion of coalition negotiations and the prospect of a soon-to-be fully operational government.”
“Apparently, for German consumers, it is more important that a government can be formed quickly.” This would reduce a central trigger of previous uncertainty and, accordingly, the savings inclination has decreased. “Because from deeper analyses, we know that uncertainty is a significant reason for high savings inclination” said the expert. “Whether the decrease in savings inclination will continue in the coming months remains to be seen and will certainly also depend on how the trade conflict between the US and the rest of the world develops.”
Income expectations have increased for the second month in a row. After moderate growth in the previous month, the income indicator increased by 7.4 points in April, resulting in a value of 4.3 points, the highest since October 2024. Back then, 13.7 points were measured. However, compared to April 2024, there is still a deficit of 6.4 points.
According to GfK, the positive income prospects may also be due to the collective agreement in the public sector, which was concluded at the beginning of April. According to this, employees of federal and municipal administrations received a salary increase of three percent, at least 110 euros per month, starting from April 1, 2025. Starting from May 1, 2026, there will be another increase of 2.8 percent. This is above the current expected inflation rate of around two percent, benefiting purchasing power.
The improved income prospects also benefit the purchasing intention in this month. It gains 3.3 points and currently stands at -4.9 points. Compared to the same period of the previous year, the increase is 7.7 points.
Despite the overall low level, the purchasing intention has shown an upward trend since early 2023 (value in January 2023: -18.7). Whether this trend can continue depends, among other things, on whether inflation remains around two percent, close to the target value of the European Central Bank (ECB). Increased uncertainty, such as through escalating trade conflicts, would likely again dampen the recovery of consumer sentiment.
Economic expectations have increased for the third month in a row: With an increase of 0.3 points, the rise is modest. The indicator thus shows a value of 7.2 points in April 2025. The last better value was measured in July 2024 with 9.8 points. Compared to the same period of the previous year, the increase is 6.5 points.
Thus, consumer sentiment is resisting the uncertain developments on the stock markets caused by the US administration’s tariff policy. At the same time, growth forecasts for this year have been revised downward once again. The third consecutive recession is now looming – a novelty in the post-war history of the Federal Republic. The survey was conducted from April 3 to 14 and the results are based on approximately 2,000 consumer surveys conducted monthly on behalf of the European Commission.