German GfK Consumer Climate Indicator Climbs to -24.2 for May

On Thursday, April 25, the German economy was in the spotlight again, with German consumer confidence in focus.

German GfK Consumer Climate Indicator Advances to -24.2

The German GfK Consumer Climate Indicator advanced from -27.3 to -24.2 for May. Economists predicted an increase to -25.9.

According to the April survey,

• The willingness to save limited the upside in the headline indicator, rising by 2.5 points to 14.9 points. In April 2023, the willingness to save stood at 1.8 points.
• Income expectations advanced by 12.2 points to 10.7 points, the highest level since January 2022 (16.9 points).
• The willingness to buy increased by 2.7 points to -12.6. Nevertheless, the willingness to buy remained low, highlighting ongoing uncertainty about the labor market and the economy.
• Economic expectations rose by 3.8 points to 0.7 points. Year-on-year, economic expectations were down 13.6 points.

Consumer Confidence and June ECB Rate Cut Puts

The sub-components of the survey supported investor expectations of a June ECB rate cut. Despite the jump in income expectations, consumer plans to save signaled a lackluster demand environment. Downward trends in consumer spending could dampen demand-driven inflation and support multiple ECB rate cuts.

EUR/USD Reaction to German GfK Consumer Climate Survey

Before the release of the German GfK Consumer Climate survey, the EUR/USD fell to a low of $1.06916 before rising to a high of $1.07130.

In response to the GfK Consumer Confidence numbers, the EUR/USD fell to a low of $1.07114 before rising to a high of $1.07131.

On Thursday, April 25, the EUR/USD was up 0.13% to $1.07122.

Up Next

ECB Executive Board member Isabel Schnabel is on the calendar to speak. Views on inflation and post-June interest rate plans need consideration.

Investors should also consider the US economic calendar. Q1 2024 GDP and weekly jobless claims figures warrant investor attention. Barring an unexpected spike in US jobless claims, the GDP numbers will likely impact Fed interest rate cut bets more.

Economists forecast the US economy to grow by 2.5% in Q1 2024 after expanding by 3.4% in Q4 2023.