Print

Mail

wiki links

German consumer confidence falls for first time in a year

German consumer confidence unexpectedly fell for the first time in more than a year as concerns that rising energy prices and higher unemployment will erode spending power outweighed signs of economic recovery.

GfK AG’s sentiment index for next month, based on a survey of about 2,000 people, fell to 4 from a revised 4.2 for this month, the Nuremberg-based market-­research company said in a statement yesterday. That’s the first decline since September last year. Economists had forecast an increase to 4.5 from an initially reported 4.3, the median of 13 estimates in a Bloomberg News survey showed.

Crude oil prices rose to the highest in a year this month, threatening spending power at the same time as unemployment increases. While German business confidence rose to the highest in more than a year this month and manufacturing expanded, the expiry of government stimulus measures and a strengthening euro may curb the pace of the recovery next year.

“Despite the slight setback, private consumption remains a major source of support for the German economy this year, since investments and exports will record large decreases at the close of 2009,” GfK said in the report. “It remains to be seen whether private consumption can also fulfill this supportive function in the coming year.”

GfK’s measure of economic expectations increased to 8.7 from 3.4 in the previous month. An index of income expectations fell to 12.9 from 16 and a gauge of consumers’ propensity to spend dropped to 26.1 from 36.5.

“The propensity to buy has also decreased in the wake of falling income expectations,” GfK said. “One reason for this is certainly the discontinuation of the scrappage bonus at the end of September,” it said, referring to a government incentive to buy new cars.

Revenue at Volkswagen AG’s Audi luxury cars division will probably fall less than expected this year, and its German sales will return to “light growth” next year, Audi’s sales chief Peter Schwarzenbauer said last week.

The stimulus to consumption from low inflation will also “lose its positive impact” in the near future, GfK said. Oil has risen 80 percent this year to around US$80 a barrel and consumer price expectations have reached a “turning point.”
This story has been viewed 556 times.