German consumer morale is set to improve in July as rising income expectations outweighed concerns over escalating tensions in Eurozone, the latest survey results from the market research group GfK showed Tuesday.
Uncertainty surrounding the Greek elections and the Spanish banking rescue at the time of the survey, nonetheless, dampened Germans' economic expectations in June to a 6-month low.
GfK said that its forward-looking consumer confidence index for July rose to 5.8 from 5.7 in June, defying economists' expectations for a decline to 5.6 in July.
The indicator for income expectations for June jumped by 8.1 points from a month earlier to 40.1 points. Both rising employment and noticeably improved salary agreements on previous years have fueled expectations of further positive income developments.
Easing inflationary pressures in the economy and a decline in overall living costs have boosted consumers' view on their purchasing power. Consequently, the indicator of Germans' willingness to buy durable goods rose by 0.7 points to 32.7 points.
The survey results reflected strong economic domestic fundamentals, which is a crucial supporting factor for growth at a time when poor performance of other European economies are dampened the prospects of any near-term revival in exports, GfK said.
Following three consecutive increases, the economic optimism of Germans fell quite noticeably in June. The indicator shed 16.6 points to reach 3 points, the lowest value since December 2011.
"Consumers are clearly worried that sooner or later Germany will also be affected by the downward trend in the eurozone," GfK said.
"As a result of the recession, the development of exports, above all, is at considerable risk in key European sales markets. This is also reflected in the attitudes of business," it added.
A recent survey by the Munich-based Ifo institute revealed that Germany's business sentiment weakened in June amid fears of a debt crisis contagion.
The Finance Ministry said this month that Germany's economic activity is likely to moderate over the rest of the year. Nonetheless, the central bank forecast economic momentum to gain pace in the second half of the year. Bundesbank projects 1 percent growth for this year.
Separately, the French statistical office reported that households' sentiment remained unchanged in June, after improving modestly in the previous month. The consumer confidence index remained unchanged at 90 in June, while economists expected the index to drop to 89. In April, the reading was 89.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.