| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Index | -24.3 | -24.2 | -25.7 | -25.8 |
Highlights
The May survey confirmed another improvement in consumer confidence in mid-quarter and expects a further, more limited, gain next month. From a marginally weaker revised minus 25.8 in May, the climate indicator is forecast to climb to minus 24.2 in June, just 0.1 point stronger than the market consensus. Historically, recent readings remain low but the trend is at least in the right direction.
In line with April, May's advance was led by income expectations which were up 2.5 points at minus 8.2, an increase of 15.5 points from a year ago. However, economic expectations deteriorated and at 12.3, were down 2.0 points on the month albeit up some 21.6 points from May 2022. Importantly too, buying intentions also weakened. After three successive rises, the sub-index fell 3.0 points to minus 16.1, reducing its gap versus a year ago to just 5.0 points.
Consequently, the improvement in the headline index may flatter to deceive. Households are still very cautious in their spending habits and consumption looks unlikely to make much, if any, contribution to real GDP growth this quarter. The German ECDI now stands at minus 2 and the ECDI-P at minus 13 - in general, economic activity is beginning to fall slightly short of market expectations.
In line with April, May's advance was led by income expectations which were up 2.5 points at minus 8.2, an increase of 15.5 points from a year ago. However, economic expectations deteriorated and at 12.3, were down 2.0 points on the month albeit up some 21.6 points from May 2022. Importantly too, buying intentions also weakened. After three successive rises, the sub-index fell 3.0 points to minus 16.1, reducing its gap versus a year ago to just 5.0 points.
Consequently, the improvement in the headline index may flatter to deceive. Households are still very cautious in their spending habits and consumption looks unlikely to make much, if any, contribution to real GDP growth this quarter. The German ECDI now stands at minus 2 and the ECDI-P at minus 13 - in general, economic activity is beginning to fall slightly short of market expectations.
Market Consensus Before Announcement
Consumer climate, which has been modestly improving, is expected to rise to minus 24.3 in June's report versus minus 25.7 in May's reading which was 2 points better than expected.
Definition
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.
Description
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.
