German Consumer Sentiment Rises to -20.6 Amid Political Stability

German consumer confidence improved more than expected heading into May, with the GfK sentiment index rising from -24.3 to -20.6, outperforming forecasts of a further decline. The improvement is attributed mainly to increased domestic political stability following the conclusion of coalition negotiations and the anticipated formation of a new government, which has reassured households despite ongoing concerns about U.S. trade tariffs. Key underlying indicators, including income expectations and the willingness to buy, showed noticeable gains, while economic expectations increased only modestly. Analysts note that political developments are currently more influential on consumer sentiment than external trade tensions, as the impact of recent U.S. tariff hikes has not yet been strongly felt by German consumers. However, the overall index remains in negative territory, indicating ongoing challenges for private consumption.