GfK: Consumer climate continues to recover
The rapid opening of the economy and society in Germany is allowing consumers to increasingly forget the Corona shock. Both economic and income expectations as well as the propensity to buy are increasing noticeably. Consequently, GfK is forecasting a value of -2020 points for July 9,6, nine points more than in June this year (revised -18,6 points). These are the results of the GfK consumer climate study for June 2020.
Consumers are increasingly emerging from the state of shock that led to an unprecedented plunge in sentiment in April. For the second time in a row, the consumer climate is improving. This means that the indicator has gained a total of more than 13 points since its low point in April of this year. However, a value of -9,6 points is the third lowest value ever measured in the history of the consumer climate.
“The weak light at the end of the tunnel, which was already apparent last month, is apparently getting a little brighter,” explains Rolf Bürkl, GfK consumer expert. “The extensive aid provided by the economic stimulus programs, such as the announcement of a temporary reduction in VAT, certainly also contributes to this. If retailers and manufacturers also pass these on to consumers, it can be assumed that one or two planned purchases will be brought forward to the second half of 2020 and thus serve as a support for consumption this year.
Nevertheless, the situation remains difficult and fragile. In view of a record number of short-time workers and rising unemployment figures, there is still great uncertainty. Germany is in a severe recession. Fear of job loss and loss of income remain an obstacle to consumption. As was the case last month, the declining propensity to save, which lost 15,4 points in June, is having a positive impact on the consumer climate.
Economic prospects are improving
For the second time in a row, consumer economic expectations increased in June. With an increase of 18,9 points, the increase is surprisingly significant. The indicator is now back in positive territory at 8,5 points, i.e. above its long-term average value of zero points. A higher value was last measured a year and a half ago, in January 2019, at 8,6 points.
Due to the comprehensive economic stimulus package, consumers expect that the German economy will be able to recover more quickly than previously feared. From the perspective of Germany as an export nation, the economy in the most important sales markets, such as the USA, France, Italy and Spain, would also have to get back on its feet quickly. However, these countries in particular were hit even harder by the pandemic.
Income pessimism continues to fade
Income expectations also increased in June for the second time in a row. After an increase of 12,3 points, the indicator climbed to 6,6 points. But it is still almost 39 points below its corresponding value from last year.
Short-time work and unemployment continue to weigh on income sentiment. A number of households must expect a loss of income. This also applies to self-employed people whose activities are still subject to the lockdown, such as organizers of large events, and whose income is therefore close to zero.
Increasing income expectations also increase the propensity to buy in June. The indicator gains 13,9 points and climbs to 19,4 points. Compared to the previous year, however, there is still a loss of a good 34 points.
