German consumer sentiment is expected to stabilise in August, after a slight decrease the month before, as households’ hopes for falling inflation have led to significantly brighter income expectations, a GfK institute survey showed on Thursday.

The institute’s consumer sentiment index rose to -24.4 heading into August from a slightly revised -25.2 in July, just above expectations of analysts polled by Reuters of a reading of -24.7. The improvement in sentiment was driven primarily by a rise in income expectations, said GfK consumer expert Ralf Buerkl, since the subindices that measure propensity to save and propensity to buy remained nearly identical from July to August.

Income expectations jumped 5.5 points to reach -5.1 in July, the highest level since the outbreak of the war in Ukraine.

“The reason for the dwindling pessimism is primarily the hope of declining inflation rates,” said Buerkl. German inflation rose in June, interrupting a steady decline since the start of the year. Analysts polled by Reuters expect inflation to return to its downward trend in July when the statistics office releases its latest figures on Friday. “This means that the chances of consumer sentiment resuming its recovery course have improved somewhat,” but it will still remain low in the coming months, and private consumption will not be able to contribute positively to economic development, he said.

The survey period was from July 6-17, 2023. The consumer climate indicator forecasts the development of real private consumption in the following month. An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier. According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption. The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?” The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months. The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.

Meanwhile, German chip systems manufacturer Aixtron raised its full-year outlook on Thursday, driven by solid second-quarter results and the highest quarterly order intake in over a decade.

The company now sees full-year revenues in the range of 600-660 million euros ($666 million-$732 million) and order intake between 620-700 million euros, slightly higher than the company expected in February.

Germany’s deposition equipment provider has benefited from the growing demand for efficient power electronics based on silicon carbide (SiC) and gallium nitride (GaN), which accounted for the largest share of the second-quarter order intake.

SiC and GaN are materials used for products such as car clutches and bulletproof vests, LED and radar applications.

Export licenses outstanding in the previous quarter that have now been granted were also a catalyst for earnings.

Aixtron’s Q2 revenue came in at 173.5 million euros, a 24% beat to average expectations of analysts polled by Refinitiv.