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German consumer morale improves further but lockdown clouds outlook - GfK

·2-min read
FILE PHOTO: Shops affected by the COVID-19 lockdown in the western German city of Essen

(Reuters) - German consumer morale improved for the second month in a row heading into April, boosted by an easing of lockdown measures at the beginning of March, a survey showed on Thursday, though a recent decision to extend restrictions is clouding the outlook.

The GfK research institute said its consumer sentiment index, based on a survey of around 2,000 Germans, rose to -6.2 points from a revised -12.7 in March.

That was the best result since November, when a partial lockdown to contain a second wave of infections began, and clearly beat a Reuters forecast of -11.9.

Income expectation jumped to 22.3 points compared to 6.5 points in the previous month. This was in line with a survey by the Ifo institute and the Randstad employment services firm, which showed that a majority of personnel directors at German companies expected wages to rise in 2021.

The survey took place from March 3 to March 15, which was before Germany extended its lockdown until April 18 and a temporary suspension of AstraZeneca COVID-19 shots following reports of possible serious side-effects.

The second lockdown, which was tightened in mid-December, is forcing most shops and services to close. Restaurants, bars and entertainment venues have been shut since early November.

"Another hard lockdown will seriously damage the consumer climate and the current improvement will remain a flash in the pan," GfK researcher Rolf Buerkl said.

A sustained recovery in consumer sentiment will continue to be a long time coming, which means difficult times for retailers and manufacturers, Buerkl said.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year ago.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.

(Reporting by Bartosz Dabrowski in Gdansk; Editing by Michael Nienaber)