German consumer confidence set to improve in August - GfK

According to the report from market research group GfK, German consumers are gradually putting the coronavirus shock of earlier this year behind them. While economic expectations have once again gained slightly, income expectations and the propensity to buy have seen a significant increase for the third consecutive time. As a result, GfK has forecast a figure of -0.3 points for August 2020, 9 points higher than its level in July of this year (revised to -9.4 points). 

A V-shaped trend is currently emerging for the consumer climate in Germany: A sharp decline in consumer sentiment immediately followed by a rapid recovery. The consumer climate has risen significantly for the third consecutive period, gaining almost 23 points since its low this past spring. 

"There is no doubt that the reduction in value-added tax has contributed to the extremely positive progress. It is clear that consumers are looking to make major purchases earlier than planned, which will help boost spending this year, " explains Rolf Bürkl, GfK Consumer Expert. "Whether this will have a lasting impact is, however, debatable. Retailers and manufacturers must be prepared for the fact that the propensity to consume could decline once more when the standard VAT rate comes into effect in January 2021." 

Propensity to buy gaining 23.1 points in July to reach 42.5 – just four points lower than at the same time last year. Income expectations rose for the third consecutive period in July. The indicator gained twelve points and now stands at 18.6. However, this is still around 32 points lower when compared to the same period last year. The economic outlook of German consumers also improved in July. However, the indicator gained just 2.1 points, a far more modest increase than those seen for income expectations and propensity to buy. The indicator currently stands at 10.6 points. The last time a higher value was recorded was in December 2018 at 10.8 points.