By Ed Frankl
Consumer confidence in Germany is expected to improve again in April, its sixth gain in as many months, prompted by lower energy prices, though momentum in the month weakened as recession fears loom.
Germany's forward-looking consumer-sentiment index forecasts confidence to tick up to minus 29.5 in April from a downwardly revised minus 30.6 in March, the highest level since July 2022, according to data from market-research group GfK published Wednesday.
The reading is slightly worse than the consensus forecast from economists polled by The Wall Street Journal of minus 29.0.
Polling was conducted between March 2 and March 13, GfK said, indicating that respondents will have missed much of the banking-sector turmoil that culminated with Credit Suisse Group AG's takeover by UBS Group AG in neighboring Switzerland.
"Income expectations are currently benefiting from the recent noticeable drop in energy prices, especially for gas and heating oil," GfK consumer expert Rolf Buerkl said.
However, with rising inflation, the expected loss of purchasing power is holding back a recovery in demand, he said.
GfK uses data from three subindexes from the current month to derive a sentiment figure for the coming month. Income expectations and the measure for propensity to buy rose in March, but economic expectations fell back after four consecutive increases, the data showed.
The latter figure suggests a technical recession has become more likely again, with a slight decline in gross domestic product possible in the first quarter of 2023 after a 0.4% contraction in the last three months of 2022, GfK said.
But experts currently expect the German economy to recover somewhat in the second half of the year, the group added.
Write to Ed Frankl at edward.frankl@wsj.com
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(END) Dow Jones Newswires
03-29-23 0214ET
