Germany’s consumer confidence rose for a third consecutive month in May, but the improvement remains moderate as lingering economic uncertainties continue to weigh on households, according to the latest GfK Consumer Climate report powered by Nuremberg Institute for Market Decisions.
The forward-looking Consumer Climate index is projected to reach -19.9 in June 2025, up from a revised -20.8 in May. The indicator has now reached its highest level since November 2024, when it stood at -18.4. Nonetheless, sentiment remains deeply negative, reflecting ongoing caution among German consumers.
The report shows that rising income and economic expectations are not yet translating into stronger household spending. A modest increase in the willingness to save and a dip in purchase readiness are keeping the overall recovery fragile.
‘Consumer climate remains weak’ despite optimism on incomes
“The level of consumer sentiment remains extremely low, and consumer uncertainty remains high,” said Rolf Bürkl, consumer expert at the NIM.
“The unpredictable customs and trade policy of the US government, turbulence on the stock markets and fears of a third consecutive year of stagnation are reasons why the consumer climate remains weak. In view of the general economic situation, people seem to think it advisable to save.”
Indeed, the savings indicator rose by 1.6 points in May to 10.0, reversing part of April’s sharp decline. The renewed caution is dampening the positive effect of rising income expectations and economic optimism.
Income outlook improves on wage deals and cooling inflation
Consumers’ income expectations rose for the third month running, climbing 6.1 points to 10.4 — the highest level since October 2024. Though slightly below the May 2024 reading, the latest figure underscores increasing optimism about household finances.
The improved sentiment is underpinned by robust wage settlements and a mild easing in inflation.
The recent pay deal in the public sector, which includes a 3% increase this year and an additional 2.8% in 2026, is helping to support purchasing power.
According to the Federal Statistical Office, inflation slowed to 2.1% in April, down from 2.2% in the two previous months.
Despite stronger income prospects, German households appear reluctant to increase spending.
The willingness to buy index fell by 1.5 points in May to -6.4, reversing part of the gains seen earlier this year.
Compared to May 2024, however, the indicator is still up by nearly 6 points.
According to the survey, concerns over job security and geopolitical instability continue to cloud consumer sentiment.
Rising unemployment and fears of job losses are holding back discretionary purchases, even as real incomes improve.
Economic optimism at two-year high
Economic expectations rose for the fourth consecutive month, with the index climbing 5.9 points to 13.1 — its highest level since April 2023. The sustained rise suggests that consumers are cautiously hopeful about a broader economic recovery, despite the backdrop of stagnation.
The German Council of Economic Experts, in its latest spring report, forecast no GDP growth for 2025 but expects the economy to expand by 1% in 2026, assuming stabilisation in domestic and global conditions.
Market reactions
Futures on the DAX indicate the German stock market is set to open flat on Tuesday, after gaining 1.7% on Monday.
The bounce was fuelled by Donald Trump’s decision to delay steep tariffs on EU goods, easing trade tensions.
The US president postponed a planned 50% tariff hike, initially expected to take effect on 1 June, pushing the deadline to 9 July, following a phone call on Sunday with European Commission President Ursula von der Leyen.
The reprieve is especially significant for Germany, whose export-driven economy depends heavily on the US market for key sectors like pharmaceuticals, industrial machinery, and automotive components.
The euro traded at $1.1385, also unchanged for the day. On Monday, the single currency hit $1.1418, the highest level in a month.
