German consumer morale should fall slightly in April after a grim run of economic reports, a survey showed today, and economists expect rising unemployment to hit spending in the next few months.
Market research group GfK said its forward-looking gauge of sentiment, based on a survey of about 2,000 Germans, fell to 2.4 for April from March's 2.5 reading, which was revised down from an initially reported 2.6.
April's figure compared with the 2.5 estimate made by economists polled by Reuters last week, and put the indicator at its lowest level since February, ending a six-month run of rises.
Germany's headline unadjusted jobless total rose to 3.552 million in February, giving an unemployment rate of 8.5 per cent.
Highlighting the bleaker consumption picture elsewhere in Europe, consumer spending in neighbouring France posted a 2 per cent monthly decline in February -- its biggest fall in over a year.
Germans' shopping habits are key to the performance of the overall economy, Europe's largest, as consumer spending accounts for over half of gross domestic product (GDP).
Demand for cars in Germany has been boosted by a government payment of €2,500 euros to drivers who turn in vehicles over nine years old and switch to new models with lower emissions.
German GDP contracted 2.1 per cent in the final three months of last year, its weakest quarter since reunification in 1990 and the third quarter in a row in which the economy shrank.
Germany has made a weak start to 2009, with industrial orders slumping 8 per cent and output by a record 7.5 per cent in January as the trade-reliant economy suffers from a collapse in foreign demand.
Pointing to these declines, Commerzbank forecast on Monday a contraction in GDP of 6 to 7 per cent in 2009, easily the gloomiest outlook of any leading bank or think tank.
"Following pessimistic economic forecasts and slumps in production and exports, economic expectations have declined somewhat in March," GfK said in a statement.
The GfK indicator's income expectation component fell to -11.4 in March from -11.0 in February, and the "willingness to buy" component slipped to 13.9 from 14.6 over the same period.
Reuters