German consumer sentiment improved for the second consecutive month in April, buoyed by rising income expectations and a dip in savings behavior. However, the outlook remains cautious amid ongoing recession fears, according to the latest GfK Consumer Climate report in collaboration with the Nuremberg Institute for Market Decisions (NIM).
The forward-looking consumer climate index is projected to rise to -20.6 in May 2025, up from -24.3 in April. While this marks the strongest reading since early 2024, the index remains deep in negative territory, highlighting the fragility of the recovery.
A decline in the willingness to save played a key role in lifting sentiment. The savings indicator dropped by 5.4 points to 8.4 in April, after two months of increases. Analysts attributed the decline to easing political uncertainty following the resolution of coalition negotiations, which helped restore confidence.
“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 continued to rise, gaining 7.4 points to reach 4.3 — the highest level since October 2024. Despite still being below levels seen a year ago, the index reflects optimism over disposable incomes, driven by a recent public sector wage agreement. Under the deal, government workers will receive a 3% pay increase starting April 1, along with a minimum monthly boost of €110, followed by a further 2.8% rise in May 2026.
With inflation just over 2%, the agreement is expected to support real incomes. Reflecting this, the willingness to buy index rose by 3.3 points to -4.9. Although still in negative territory, the indicator shows continued recovery from early 2023 lows, when it stood at -18.7.
Nevertheless, the report cautions that the positive trend could be derailed if inflation spikes or geopolitical uncertainties escalate. While economic expectations edged up slightly — gaining 0.3 points to 7.2 — the broader backdrop remains troubling. Germany is now facing the prospect of a third straight year of economic contraction, a post-war first.
Despite the cautious consumer outlook, financial markets remained upbeat. By 9:40 CET, the euro had dipped 0.2% to $1.14, while European stocks advanced. The Euro STOXX 50 rose 0.5%, Germany’s DAX gained 0.7%, and Italy’s FTSE MIB led with a 1.5% increase.
Leading the gains in German equities were Rheinmetall AG (+5.6%), Deutsche Bank (+4.1%), and MTU Aero Engines (+2.7%). In contrast, Deutsche Börse, Porsche, and Mercedes-Benz were among the worst performers, down 5%, 4.8%, and 1.3%, respectively.
