After a buoyant start to the year, German consumers are less optimistic heading into April despite a renewed growth outlook and a vibrant labour market, a key survey showed today.
Market research firm GfK's forward-looking monthly barometer stood at 10.4 points for April, down on 10.7 for this month.
The survey of some 2,000 people showed that after a bright start to the year, German consumer optimism is waning slightly.
The gap has "once again narrowed" between rising consumer expectations of changing economic conditions and declining earnings-related conditions, against the backdrop of strong labour market performance, the GfK noted.
According to the Nuremberg-based market research institute, the indicator of economic outlook stands at 11.2 points, up seven points from March, which put an end to five consecutive months of decline.
The morale of German business leaders also picked up in March after falling for six months in a row, the Ifo, the Munich-based institute, said yesterday in its business confidence index.
"The coming months will show whether this is the beginning of a turnaround," GfK said in a statement.
The pollsters said consumers "do not expect Germany to slip into a recession this year".
They do however expect a noticeable slowdown in the economy, like Germany's "wise men" panel advising the government who last week lowered their GDP growth forecast for this year to just 0.8%.
Also weighing on the GfK survey was a drop in both expectations of income and desire to consume, the latter of which has fallen to a level last seen two years ago.
Yet Germans maintain a strong desire to consume, showing little fear for job security, while the prolonged phase of low interest rates has made them less likely to save.
German unemployment remains at historic lows, with just 5% of people out of work in Europe's largest economy in February.
Private consumption should continue to support German growth, but is reliant on consumer concerns not rising amid the prolonged Brexit negotiations, as well as trade tensions between the EU and the US, the GfK concluded.