German consumer sentiment to fall: GfK poll

27th April 2011, Comments 0 comments

Consumer sentiment in Germany is set to fall further in May following a decline in April which was the first for 10 months, the GfK economic research institute said on Wednesday.

The institute's survey of 2,000 households in Europe's biggest economy resulted in an indexed 5.7 points, a relatively solid level but a drop from 5.9 points the previous month, a GfK statement said.

GfK uses its findings to publish an indexed estimation for the month ahead, and the latest reading might undermine hopes for a rebound of consumption to help exports drive German growth.

"Higher prices, the nuclear disaster in Japan and the escalating political unrest in North Africa and the Middle East all mean that the general conditions for German consumers no longer appear quite as positive at present," GfK said.

German consumer prices gained an average of 2.1 percent in March, a level that exceeds the European Central Bank's target of just below 2.0 percent.

Of the GfK survey's three main components, two showed clear declines, notably consumer's assessment of overall economic prospects as well as those of their own finances.

But their propensity to make large purchases remained strong owing to the fact that "the excellent economic situation in Germany and rising employment are evidently easing fears of job losses," GfK said.

"Against the backdrop of an expected slowing in export growth, it will be important to have a second strong pillar for economic growth in Germany," it noted.

The government has raised its official 2011 growth forecast to 2.6 percent and expects economic activity to expand by a further 1.8 percent in 2012.

Unemployment continues to fall meanwhile, and stood at 7.1 percent of the workforce in March, a level last seen in the early 1990s.

Unemployment figures for April are to be published on Thursday.

© 2011 AFP

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