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German consumer morale dips heading into Dec, still robust
November 26, 2012 / 12:05 PM / 5 years ago

German consumer morale dips heading into Dec, still robust

BERLIN, Nov 26 (Reuters) - German consumer morale dipped slightly going into December amid concerns over the euro zone crisis and global growth but still-solid domestic demand should help Europe’s largest economy avert recession, market research group GfK said on Monday.

The forward-looking consumer sentiment indicator, based on a survey of around 2,000 Germans, eased to 5.9 heading into December from a downwardly revised 6.1 in November, the same level as in October.

December’s reading was below expectations in a Reuters poll of 24 economists for a level of 6.2.

The GfK data also showed German consumers’ readiness to make purchases and their expectations for future earnings declined in November from the previous month but were still at historically high levels, underpinned by Germany’s robust labour market.

“(December’s figure) brings to a halt for now the rising trend seen in consumer sentiment. Despite the light losses, however, the level remains satisfactory,” GfK said.

“Private consumption will thus perform its appointed role of providing important support for the German economy.”

Economists have increasingly pinned hopes on private consumption, which makes up around 60 percent of German gross domestic product (GDP), as exports to key markets in the euro zone have flagged in the face of the region’s debt crisis.

Low interest rates are also encouraging Germans, traditionally a nation of savers, to splash their cash. The index tracking their willingness to buy stood at 29.4 in November, down from 33.9 in October but still firm.

The income expectations index was 17.8 in November, down from 29.9 in October, but still well above the historic average.


“Although the signals from the economy are not very encouraging for now, the dangers of recession in the view of Germans are not increasing,” GfK said in its statement.

Recent data confirmed that Germany’s economy slowed to 0.2 percent in the third quarter from 0.3 percent in the previous three months. Economists expect it to contract in the fourth quarter but to regain momentum in early 2013.

The Ifo think tank reinforced that optimism last week with an unexpectedly upbeat reading of business morale for November, based on improved prospects for German exports outside the euro zone and expectations of strong Christmas sales.

The Ifo monthly report contrasted sharply with other recent data that had shown the private sector shrinking, industrial orders and output down and exports falling at the fastest pace since late last year.

Unemployment rose for a seventh month in October but remains near its lowest level since German reunification more than two decades ago, providing key support for consumer confidence.

“People are not afraid of losing their jobs and so are more willing to make bigger, more expensive purchases,” GfK said.

“Germans still expect their incomes to rise in the future. As inflation in coming months will not accelerate significantly, a considerable portion of employees will get real wage increases,” GfK added. (Reporting by Gareth Jones, editing by Noah Barkin)

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