By Ed Frankl
German consumers joined businesses in offering a more pessimistic outlook, reflecting more uncertainty about the country's economic rebound.
The forward-looking consumer-climate index for Germany, published Wednesday by research group GfK and the Nuremberg Institute for Market Decisions, forecast confidence to slip to minus 21.8 in July from minus 21.0 this month.
The result was the first decline after four increases in a row, and disappointed economists expectations that expected sentiment to rise to minus 19.5, according to a Wall Street Journal poll.
"The interruption of the recent upward trend in consumer sentiment shows that the road out of sluggish consumption will be difficult and there can always be setbacks," said Rolf Buerkl, consumer expert at NIM.
The higher inflation rate in Germany in May--which was 2.4%, from 2.2% in April--caused more uncertainty among consumers, which meant respondents showed more willingness to save, Buerkl added.
Both income and economic expectations worsened, and propensity to make purchases dropped, the data said.
News of falling consumer sentiment comes after Germany's leading business barometer, the Ifo index, and private-sector firms reported declining sentiment, bucking expectations that they would improve.
The German economy expanded moderately in the first quarter of 2024, after shrinking 0.5% in the final three months of last year.
However, despite inflation creeping up last month, the European Central Bank earlier in June cut its key interest rate. That could ease the pressure on German consumers in the months ahead, with economists expecting a rebound in spending spurring growth in the second half of this year.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
06-26-24 0214ET
