Investor Alert

New York Markets Open in:

Feb. 25, 2021, 2:12 a.m. EST

German consumer confidence set to recover in March

By Maria Martinez

German consumer sentiment is set to recover in March, following the collapse caused by the tightening of coronavirus restrictions at the beginning of the year, market-research group GfK said Thursday.

"The recent dip in infection rates and the launch of the vaccination program are fueling hopes of a speedy easing of measures," Rolf Buerkl, consumer expert at GfK, said.

GfK's forward-looking consumer sentiment index is set to rise to minus 12.9 points in March from a revised minus 15.5 points in February. The increase beats the forecast of economists polled by The Wall Street Journal, who expected consumer sentiment to rise to minus 14.5 points.

GfK uses data from three subindexes from the current month to derive a sentiment figure for the coming month, measuring economic expectations, income expectations and propensity to buy.

The three subindexes had gains in February. Both economic and income expectations have more than compensated for the previous month's losses, while propensity to buy has recovered around one-fifth of its losses, GfK said.

Propensity to buy rose to 7.4 points in February from zero points in January, when it suffered a 37 points drop.

After four decreases in a row, income expectations have seen an increase in February, rising to 6.5 points from minus 2.9 in January. Amid hopes of an end to the strict lockdown, there are also growing expectations of increases in income, GfK said.

The economic outlook has brightened again, with the indicator of economic expectations rising to 8.0 points from 1.3 points in January. In contrast to income expectations and propensity to buy, this indicator is almost seven points higher than one year ago, GfK said.

Mr. Buerkl said consumer sentiment in Germany will only recover sustainably when the strict lockdown ends and shops, hotels and restaurants reopen.

"If, on the other hand, the measures are extended once again, the chances of a swift recovery will disappear and consumer sentiment will face further tough times ahead," he said.

Write to Maria Martinez at maria.martinez@wsj.com

Link to MarketWatch's Slice.