German consumer sentiment set to improve markedly in May

German consumer sentiment is set to improve markedly in May from April, according to the latest findings by market research group GfK.

GfK said the overall index was forecasting 9.7 points for May compared to 9.4 points the month before, with growth for both economic and income expectations as well as propensity to buy.

Economists had been expecting the index to be unchanged at 9.4.

GfK said the latest findings confirm its forecast published at the beginning of the year that private consumption will rise by around 2% this year. The figure for the previous year was 1.9%.

“Given expected overall economic growth of around 1.6 percent, domestic demand will continue to be the essential pillar of the German economy. Underlying domestic conditions, such as rising employment, income growth and very moderate inflation, will be primarily responsible for ensuring this is the case," it said.

GfK’s economic expectations index rose by 5.8 points to 6. 3 while the income expectations indicator gained 7 points to a nine-month high of 57.5.

Finally, the index for propensity to buy increased by 5.4 points in April to 55.4, which GfK attributed in part to the European Central Bank’s decision in March to reopen the monetary floodgates.