German consumer sentiment tumbles in December on job cut fears, GfK report shows
German December consumer indicator hits its lowest since May
GfK reading of -23.3 well below -18.4 point forecast
Recent job cuts announced by major companies hurt sentiment
Expectations for next 12 months worsen for 4th month in a row
BERLIN, Nov 27 (Reuters) -German consumer sentiment is expected to tumble in the last month of the year, breaking a streak of increases as households, confronted by reports of job cuts, grow more pessimistic about their income prospects, a survey showed on Wednesday.
The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), fell significantly more than expected going into December, to -23.3 points from a slightly revised down -18.4 points the month before.
Analysts polled by Reuters had expected a reading of -18.6.
The December figure marks the lowest point for consumer sentiment since May, when it was -24 points, and is similar to the comparatively low level seen at the end of last year.
"The last few weeks of the year are ending with a significant setback in the consumer climate," said NIM analyst Rolf Buerkl.
"The reasons for this are certainly the job cuts reported by industry and the relocation of production abroad. In addition, the number of bankruptcies has recently increased," he said.
"In short, consumer climate remains at rock bottom."
Big-name companies, such as Bayer BAYGn.DE, Volkswagen VOWG_p.DE and Thyssenkrupp TKAG.DE, have announced job cuts in recent months as Europe's largest economy has struggled to recover.
Consumers' initial hopes for an economic recovery have gradually dissipated over the year, with the indicator on the expectations for the next 12 months declining for a fourth month in a row to its lowest value since February, the survey showed.
That tracks with the government's forecast for a 0.2% economic contraction in 2024, marking a second year of decline and cementing Germany's place as a laggard among its large euro zone peers.
DEC 2024 | NOV 2024 | DEC 2023 | |
Consumer climate | -23.3 | -18.4 | -27.6 |
Consumer climate components | NOV 2024 | OCT 2024 | NOV 2023 |
- willingness to buy | -6.0 | -4.7 | -15.0 |
- income expectations | -3.5 | 13.7 | -16.7 |
- business cycle expectations | -3.6 | 0.2 | -2.3 |
NOTE - The survey period was from Oct. 31 to Nov. 11, 2024.
The consumer climate indicator forecasts the progress 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 compared with the same period a year earlier.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% 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 respondents' assessment of the general economic situation over the next 12 months.
Reporting by Miranda Murray; editing by Matthias Williams and Tomasz Janowski
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