German consumer sentiment is likely to decline going into February, as worries over unemployment weigh on Europe's largest economy, the GfK market research group said today.
The consumer sentiment indicator, based on a survey of about 2,000 Germans, fell to 3.2 for February from a revised 3.4 in January. January's reading had been initially reported as 3.3.
The forward-looking indicator registered its fourth consecutive monthly drop but was slightly above a forecast for 3.1 made by economists polled by Reuters.
"The threat of rising unemployment as well as the weakened economic recovery played a considerable role," Rolf Buerkl, a researcher for Nuremberg-based GfK, said in a statement.
"From the point of view of consumption, 2010 will therefore be slightly more difficult than the past year," said Buerkl.
Germany emerged from its deepest post-war recession in the second quarter of 2009 but more recent data points to a stuttering recovery and Economy Minister Rainer Bruederle said earlier this month growth in the first quarter of this year could be close to zero.
Two out of three sub-components in the survey, which refer to January, worsened over the past month, GfK said.
The survey's gauge of consumers' income expectations, weighed on by joblessness fears, fell to 12.5 from 15.0, while the sub-index of economic expectations slid to 1.5 from 1.7.
Unemployment is widely expected to rise in the coming months and incomes are under pressure, with hundreds of thousands of Germans shifted to part-time work under the government's "Kurzarbeit" scheme to prevent mass layoffs.
Nonetheless willingness to buy increased in January to 25.4 from 21.2, as consumers made the most of the sales.
In addition, Chancellor Angela Merkel's new coalition has passed a major package of tax cuts worth some €8.5 billion for this year aimed at tax relief to firms and families.
Rising state debt has strained public finances, however, and a row over some 20 billion euros in additional tax cuts planned for 2011 had played out within in the government for weeks.
Reuters