Consumer Sentiment in Germany Remains Unchanged in June, with a Slight Decline Predicted for July
The GfK Consumer Climate Index, released on Thursday, presents a mixed picture of consumer sentiment in Germany for the month of June. While expectations of the economy and income are improving, the willingness to make purchases remains largely unchanged and the tendency to save is on the rise.
The index, which predicts a slight decline of 0.3 points to -20.3 in July, attributes the stagnation of consumer confidence to a growing tendency to save, which is hindering the continuation of the recovery. According to the GfK and the Nuremberg Institute for Market Decision, the savings indicator rose by 3.9 points in June, reaching its highest level in over a year, with 13.9 points.
“This means that the consumer climate must take a small step back after three consecutive increases” said Rolf Bürkl, a consumer expert at the NIM. “The main reason for this is the increased tendency to save, which is currently countering the positive impulses from improved income expectations. A high savings rate among consumers is also a reflection of their continued uncertainty and a lack of planning security, which is particularly important for larger purchases or expenses.”
Income expectations among German consumers remain on an upward trend, with the income indicator rising for the fourth consecutive month, reaching a value of 12.8 points. This represents a small plus of 4.6 points compared to the previous year, largely driven by the recent positive collective bargaining agreements, such as those in the public sector, combined with a moderate inflation rate, leading to real purchasing power gains for a significant portion of employees. Even retirees can benefit, as their statutory pensions will increase by 3.74% as of July 1, 2025.
In contrast to the improved income expectations, the willingness to make purchases remains relatively cautious, with the indicator increasing by only 0.2 points, currently standing at -6.2 points. This means that the willingness to make purchases cannot benefit from the significant increase in income expectations for the second month in a row, as the uncertainty caused by the still unpredictable US government, particularly with regards to trade and customs policies, is causing German consumers to remain hesitant and wait, the GfK said.
From the consumer’s perspective, the signals for an economic recovery in Germany in the coming months have strengthened. The business climate indicator is rising, reaching a value of 20.1 points, the highest level since the outbreak of the Ukraine war. In February 2022, the indicator measured 24.1 points.
Many consumers seem to assume that the economy will recover in the further course of the year, supported by the recently published economic forecasts from the most important German economic research institutes, which predict a small increase in the country’s gross domestic product of around 0.3% this year. The growing optimism is largely based on the recently approved economic stimulus packages for defense and infrastructure, which are expected to take effect in the second half of 2025.