Germany’s consumer confidence improved for a second consecutive month in April, although sentiment remains muted amid persistent economic headwinds, according to the latest GfK Consumer Climate survey powered by NIM.
The forward-looking consumer climate index forecasts a rise of 3.7 points to -20.6 for May 2025, compared with -24.3 in April, marking the best reading since early 2024 but still deeply negative. The monthly survey, published by GfK and the Nuremberg Institute for Market Decisions (NIM), highlights that rising income expectations and a lower propensity to save have helped lift sentiment, even as broader economic expectations improved only marginally.
Savings intentions decline amid easing political uncertainty
A significant drop in the willingness to save supported the overall improvement in consumer sentiment. After two months of increases, the savings indicator fell by 5.4 points to 8.4 in April. Analysts attribute the drop largely to diminishing political uncertainty following the successful coalition talks that paved the way for a functioning German government.
“The realignment of the US administration’s trade policy has not yet left a sustained mark on German consumers’ mood,” said Rolf Bürkl, consumer expert at NIM. “Instead, the swift resolution of political deadlock at home seems to have reduced a key driver of uncertainty, softening households’ precautionary savings behaviour.”
Income expectations brighten following pay deal
The income expectations index rose for a second consecutive month, gaining 7.4 points to reach 4.3 — the highest level since October 2024. Although still 6.4 points below its level a year ago, the improvement reflects stronger prospects for disposable income, boosted by a new public sector wage deal.
Under the agreement, public sector workers will see a three percent pay rise from April 1, with a guaranteed minimum uplift of €110 per month, followed by a further 2.8 percent increase in May 2026. With inflation currently running just above two percent, the deal should support real incomes and purchasing power.
Willingness to buy ticks higher but remains subdued
Echoing the positive trend in income sentiment, the willingness to buy indicator climbed 3.3 points to -4.9. Though still negative, it marks a sustained recovery from the lows seen at the start of 2023, when the index stood at -18.7.
Nonetheless, the survey warns that future gains hinge on inflation remaining stable near the European Central Bank’s two percent target. Any re-emergence of uncertainty, particularly if global trade tensions escalate, could derail the fragile upward trend in consumer demand.
Economic expectations edge up despite recession fears
Economic expectations rose modestly for the third month in a row, gaining 0.3 points to reach 7.2 in April. This relative resilience comes despite fresh downward revisions to Germany’s growth outlook, with the economy now facing a third consecutive year of contraction — an unprecedented event in the post-war era.
Markets have so far shrugged off the mixed consumer data. By 9:40 CET, the euro was down 0.2% at 1.14 against the dollar, while European equities gained ground. The Euro STOXX 50 rose 0.5%, Germany’s DAX added 0.7%, and Italy’s FTSE MIB outperformed, climbing 1.5%.
Among German equities, Rheinmetall AG, Deutsche Bank and MTU Aero Engines led the gains, rising 5.6%, 4.1% and 2.7%, respectively. Conversely, Deutsche Börse, Porsche and Mercedes-Benz were among the laggards, falling by 5%, 4.8% and 1.3%.
