German consumer morale has fallen for a second straight month, a leading survey showed on Wednesday, in the latest sign that weakening household spending will weigh on growth in Europe's largest economy.
The GfK research group said its forward-looking indicator of consumer sentiment, based on a survey of some 2,000 Germans, declined unexpectedly to 3.7 for the month of December after registering 4.0 in November.
It was the first time since September 2008, when the bankruptcy of US investment bank Lehman Brothers triggered a global financial crisis, that the survey had declined for two consecutive months.
Mounting fears of job losses and falling income were behind the drop. Yesterday, gross domestic product (GDP) data showed private consumption declining substantially in the third quarter and dragging down growth.
Two out of three sub-components in the GfK survey, which refer to November, worsened over the past month, the Nuremberg-based research group said.
The survey's gauge of consumers' economic expectations slumped to 0.9 in November from 8.7 in October, while the sub-index of their income expectations tumbled to 6.2 from 12.9.
Even though German unemployment has declined for the past four months, layoffs are expected to pick up in 2010, pushing up the jobless rate, which stood at 8.1 per cent in October on a seasonally-adjusted basis.
Germany emerged from its deepest post-war recession in the second quarter, supported by government measures including the short-time work scheme and a car-scrapping subsidy, and growth accelerated in the third quarter.
But the shift of over one million German workers to part-time work has also reduced incomes and increased worries about long-term job security.
Many German manufacturers are operating well below full capacity and are expected to pare back their workforces over the coming year.
One bright spot was the GfK's measure of consumers' willingness to buy, which rose slightly to 26.3 from 26.1.
The latest survey of German corporate sentiment, released yesterday, was also encouraging. The Ifo think tank's business climate index, based on a monthly poll of some 7,000 firms, rose in November to a 15-month high.
Reuters