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Consumer sentiment on a good path to recovery

Consumer sentiment continued its positive trend of the previous months in May and improved further. This is according to the latest consumer barometer published by the German Trade Association (HDE).

The falling inflation rate is also having a positive impact. Increasing consumer optimism could lead to a recovery in private consumption in the coming months.

Compared to the previous month, consumers’ propensity to buy has increased further, which may boost private consumption in the coming weeks. However, consumers are also planning to increase their savings efforts. Disposable income is therefore not only being invested in consumption, but also in financial security.

In their current economic forecast, both companies and the German government are somewhat more optimistic about the future economic development in Germany. Consumers share this assessment. Their economic expectations have also risen compared to the previous month. They also expect an economic upturn to improve their personal income situation.

On a European level, consumer confidence has also improved. The indicator in the Euro Area rose by 0.2 points from the previous month to -14.7 in April 2024, the highest since February 2022, according to the recent “Consumer Confidence Indicator” report from Statista. Across the European Union as a whole, consumer sentiment went up by 0.1 points to -13.7 thanks to consumers’ gradually brightening views regarding their household’s past and expected financial situation, which were partly offset by lower expectations about the general economic situation in their country. Consumers’ intentions to make major purchases has also improved. Currently, Germany´s consumer sentiment is at -10, with most Western European countries lagging behind.

More information on the report can be found under the following link.

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