German consumers remain cautious as economic uncertainty persists

27th February 2008, Comments 0 comments

German consumer sentiment remains subdued, a key survey released Wednesday showed, as the economic uncertainty unleashed by the US mortgage crisis makes households in Europe's biggest economy reluctant to spend.

27 February 2008

BERLIN, Germany - German consumer sentiment remains subdued, a key survey released Wednesday showed, as the economic uncertainty unleashed by the US mortgage crisis makes households in Europe's biggest economy reluctant to spend.

The Nuremberg-based GfK research institute said its forward-looking consumer sentiment index came in at 4.5 points for March, which was unchanged on the first two months of the year.

This was despite improvements in German unemployment and the GfK saying that its survey of consumers pointed to growing expectations of increased income in the coming months on the back of higher wage settlements.

"The repercussions of the mortgage crisis in the US are just as evident as the uncertainty prompted by unstable developments in the US economy, the current high rate of inflation and volatility in the stock markets," the GfK said releasing its latest monthly survey, which is based on about 2,000 interviews.

"It's difficult for consumers to perceive to what extent an eventual US crisis could affect the German economy," the GfK said.

After rising by 5 points at the start of the year, the GfK's survey indicator measuring economic expectations dropped sharply in February, falling by 14.1 points to stand at 14.6.

This represented the biggest decline in the GfK's economic expectations survey since the end of 2006.

However, the GfK survey component gauging income expectations rose again this month, with the indicator climbing 4.2 points to its current level of minus 0.5 points. This followed a slight dip in January.

The release of the latest GfK survey came just one day after the publication of another key survey showing business confidence in Germany recording its second monthly rise this year.

[Copyright dpa 2008]

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