Germany’s second partial lockdown weighs on consumer morale

(Reuters) – German consumer morale fell further heading into December as a partial lockdown to curb a second coronavirus wave in Europe’s largest economy hit households’ income expectations as well as their willingness to buy, a survey showed on Thursday.

The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, dropped to -6.7 in November from a revised -3.2 in the previous month.

The reading missed a Reuters forecast for a narrower drop to -5.0.

GfK consumer expert Rolf Buerkl said although retail shops had been kept open so far, the closure of restaurants, bars, hotels and entertainment venues since Nov. 2 clouded consumers’ mood.

Rising numbers of COVID-19 are increasing uncertainty so Germans hold more onto their money, Buerkl added.

“The hopes for a rapid recovery that arose in early summer have definitely been dashed,” Buerkl said.

German business morale also fell in November, suggesting that the economy will shrink in the fourth quarter due to the renewed curbs, the Ifo institute said on Tuesday.

Germany’s infection rates have been accelerating and cases are close to reach one million, with daily COVID-19 deaths hitting a record 410 on Wednesday.

Chancellor Angela Merkel agreed with leaders of Germany’s 16 federal states to extend and tighten measures against the coronavirus until at least Dec. 20 and they are likely to extend them into January, she said on Wednesday.

“Only a noticeable decrease in infections and a relaxation of the restrictions will bring more optimism again,” Buerkl said, adding that the infection rate in the coming weeks will determine whether consumer sentiment could stabilise again.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop in comparison with the same period a year ago.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent in private consumption.

The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?”

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.

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