According to a GfK institute study released on Friday, as energy prices decline, German consumer sentiment is expected to rise for a fifth consecutive month in March. The institute predicted that its measure of consumer confidence would rise to -30.5 in March, up from a revised reading of -33.8 in February, but somewhat below the average prediction of -30.4 in a Reuters survey of analysts. “Optimism is gradually returning,” said GfK consumer analyst Rolf Buerkl in reference to recent cuts in energy costs and news that experts believe a recession in Germany this year can now be avoided. However, he issued a warning that the indicator’s still extremely low level would prevent private spending from having a beneficial impact on Germany’s overall economic growth this year. Income expectations and the economic outlook, two of the three sub-indices used to construct the projection for the current month, both continued to rise. The willingness to purchase been fluctuating during the past three months, increasing in February after declining in January. FEB 2023 MAR 2023 MAR 2022 Consumer sentiment: -30.5, -33.8, and -8.5 Customer climate products FEB 2023 JAN 2023 FEB 2022 – Expectations for the business cycle -27.3 -32.2 3.9 – Expectations for the propensity to buy -17.3 -18.7 1.4 6.0 -0.6 24.1 NOTE: The study was conducted from February 2 to February 13, 2023. The consumer climate indicator predicts how actual private consumption will change in the upcoming month. A result above zero on the indicator indicates rising private consumption year over year. A figure less than zero denotes a decline from the same time last year. GfK estimates that a change of one point in the indicator translates into a change in private consumption of 0.1% over the course of a year. The balance between affirmative and negative replies to the query “Do you think this is a good time to buy large items?” is represented by the “willingness to buy” indicator. The income expectations sub-index represents projections for how household finances will change over the next 12 months. The extra business cycle expectations index captures respondents’ perceptions of the state of the economy over the following 12 months.
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