German consumer confidence rose for the month of May, according to a market research survey released on Thursday.

The survey was published jointly by the GfK market research company and the Nuremberg Institute for Market Decisions (NIM).

What did the survey find?

According to the survey, consumer confidence rose by 3.1 points to -24.2 heading into May.

The increase was higher than expected, with experts interviewed by the Reuters news agency foreseeing a rate of -26.

This was the third monthly increase in a row, with GfK saying that its barometer hit a "two-year high."

The increase was driven by rising income expectations after unions achieved wage agreements in multiple sectors of the German economy.

"Wage increases combined with a recent decline in the inflation rate form the basis for increased purchasing power among private households," said Rolf Bürkl, a NIM consumer expert.

Bürkl said consumers in Germany were purchasing more expensive products like cars and furniture.

However, he stressed that Germans' propensity to buy was still substantially lower than before the start of the COVID-19 pandemic, which saw a stark drop in consumption due to lockdowns in 2020 and 2021.

The German economy has also been marred by inflation and rising energy prices since the start of Russia's war in Ukraine.

German economy sees mildly improving indicators

The survey came amid a number of improved indicators for Europe's largest economy, which has grappled with inflation and lagging growth.

On Wednesday, Germany raised its economic forecast for the year to 0.3% growth, up 0.2 percentage points from the previous prediction. It cited rising private consumption as the reason for the increase.

The inflation outlook for 2024 was also lowered from 2.8% to 2.4%.

"The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money," Economy Minister Robert Habeck said, referring to the change in Berlin's economic outlook.

sdi/sms (AFP, Reuters, dpa)

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