The February survey confirmed a modest improvement in consumer confidence in mid-quarter and expects a further gain next month. From a marginally stronger revised minus 33.8 in February, the climate indicator is forecast to climb to minus 30.5 in March, just minimally weaker than the market consensus. While still low, the trend in the headline index is at least moving in the right direction.

Economic expectations (6.0 after minus 0.6) posted another solid gain and now stand above their zero long-run average for the first time since the start of the war in Ukraine. At the same time, income expectations (minus 27.3 after minus 32.2) also improved and have now risen fully 40 points since their low in September last year. However, while buying intentions (minus 33.8 after minus 37.6) similarly advanced, they were still nearly 27 points below their level a year ago and continue to signal a very cautious attitude towards spending.

In line with recent surveys, today's results suggest that household confidence is gradually returning. Even so, current levels make any significant near-term bounce in consumer demand unlikely. The latest data trim the German ECDI 7 and the ECDI-P to exactly zero. Both readings suggest that economic activity in general is currently moving at least broadly in line with market expectations.

Consumer climate, which improved nearly 4 points in February to minus 33.9, is expected to improve further to minus 30.4 for March's readings.

GfK's consumer climate survey asks around 2,000 German consumers every month about their assessment of economic conditions. The questions focus on economic and income expectations and consumers' willingness to buy. Having calculated the differences between the positive and negative responses for each question the results are synthesized into a single number that reflects overall consumer expectations for the coming month.

Any insight into household expenditure is vital to understanding how the economy as a whole is shaping up. The monthly correlation between the GfK consumer gauge and actual spending is not especially high but trends in the index can offer useful information about potential underlying developments in consumer behavior. As a forward looking indicator, the GfK index is one input used by analysts in the construction of their forecasts of future German retail sales.