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Consumer confidence hits year's low

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Consumer confidence hits year's low
Photo: DPA
13:07 CEST+02:00
German consumer sentiment has been hit by the transatlantic debt crisis and fears of a new recession, falling to its lowest level since late last year, the GfK research institute said Thursday.

GfK said its index of household confidence for September was 5.2 points, the lowest figure since November 2010. GfK also revised down its August reading to 5.3 points from the initial 5.4 points.

That was the sixth consecutive decrease and was in line with an average of analysts forecasts compiled by Dow Jones Newswires and recent other data all showing the Germany economy, Europe's biggest, beginning to slow.

"The worsening of the international debt crisis and rising fears of a return to recession for the global economy have clearly left their mark on the economic optimism of Germans," the statement released by the institute said.

GfK noted however that shoppers' willingness to buy has improved once again, even though they think the economy and their own incomes will worsen in the coming months.

Economy Minister Philipp Rösler noted the dip in consumer confidence but insisted that it remained "robust." He added in a statement that "household confidence will remain a pillar of growth in the second half" of the year.

Berenberg Bank senior economist Christian Schulz was modestly upbeat about the latest data as well, noting that as the GfK index remained above 5.0 points it was still doing better than in any of the three previous years.

"Consumer confidence is one of the less reliable leading indicators of growth in Germany but the fact that it is decreasing at a moderate pace, and that purchasing intentions remain firm, gives reassurance that a buyers strike is not in the cards," Schulz said.

GfK also publishes sub-indices which refer to the current month and its economic expectations index plunged to 13.4 points from 44.6 points in July. Personal income expectations were moderately lower.

The consumer outlook was confirmed moreover on Wednesday by the business

sentiment index released by the Ifo institute, GfK said.

The Ifo index hit a 14-month low in August following its sharpest drop since 2008, a clear sign that Europe's biggest economy is faltering. Data released by the federal statistics office has shown that the economy grew by just 0.1 percent in the second quarter of 2011, well below the first-quarter figure of 1.3 percent.

The central bank and government officials nonetheless expect growth overall of around 3.0 percent this year.

AFP/mw

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