German consumer confidence weaker: GfK

25th August 2011, Comments 0 comments

German consumer sentiment has been hit by the trans-Atlantic debt crisis and fears of a new recession, falling to its lowest level since late last year, the GfK research institute said Thursday.

GfK released its latest index of household confidence, forecasting 5.2 points in September, the lowest figure since November 2010, a statement said.

That was the sixth consecutive decrease, and was in line with an average analyst forecast compiled by Dow Jones Newswires.

GfK also revised an estimate for August down to 5.3 points from the initial figure of 5.4.

"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 said.

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

Berenberg Bank senior economist Christian Schulz was modestly upbeat about the latest data, 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 on 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 in from 44.6 points in July.

Personal income expectations were moderately lower.

The consumer outlook was confimed 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 economic activity to expand by around 3.0 percent this year.

© 2011 AFP

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