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German Consumer Confidence To Improve In July: GfK

germany may25 25jun20 lt

German consumer sentiment is set to improve next month reflecting the rapid reopening of the economy after coronavirus related lockdown and economic stimulus package, survey results published by the market research group GfK showed Thursday.

The forward-looking consumer sentiment index rose to -9.6 in July from revised -18.6 in June. The score was forecast to rise moderately to -12 from June's initially estimated -18.9.

"The faint light at the end of the tunnel, which was already apparent last month, is apparently getting somewhat brighter," Rolf Bürkl, GfK consumer expert, said.

"The extensive support provided by the economic stimulus packages, such as the announcement of a temporary reduction in value-added tax (VAT), is certainly a contributing factor," Bürkl added.

Nonetheless, the situation remained difficult and fragile amid a record number of short-time workers and rising unemployment. Moreover, the economy remained in a severe recession.

All sub-components namely economic and income expectations, as well as propensity to buy, increased in June.

For the second straight month, the economic expectations index improved in June, by 18.9 points to 8.5 points. The reading was above its long-term average as well as reached its highest level since January 2019.

Likewise, the income expectations indicator advanced 12.3 points to 6.6 points. Nonetheless, the survey showed that short-time work and unemployment continue to depress income sentiment. A number of households expect a fall in income.

Rising income expectations in turn helped to lift the propensity to buy. The corresponding indicator gained 13.9 points to 19.4 points.

The survey was conducted by GfK on behalf of the European Commission. The survey based on 2,000 consumer responses was carried out between June 3 and 15.

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