The June survey shows confidence stalling at quarter-end and consumers surprisingly expecting a small setback in the next month. From a weaker revised minus 24.4 in June, the climate indicator is forecast to fall to minus 25.4 in July, 2.4 points weaker than the market consensus and the first monthly decline after eight consecutive increases.

Leading the sub-index declines in June were economic expectations, which at 3.7, were down 8.6 points on the month, albeit up some 15.4 points from June 2022. Similarly, income expectations, at minus 10.6, were down 2.4 points on the month, though up by 22.9 points from a year ago. Only buying intentions strengthened in June, with the sub-index rising 1.5 points to minus 14.6, reducing its gap versus a year ago to just 0.9 points.

The German ECDI now stands at minus 43 and the ECDI-P at minus 50, indicating that, in general, economic activity is falling well short of market expectations.

Consumer climate, which has been improving, is expected to improve a bit to minus 23.0 in July's report versus minus 24.2 in June.

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.