26 Nov 2020
Consumer morale in Germany continues to fall moving into December.
A partial lockdown in the country to contain a second wave of coronavirus impacted households’ income expectations and their willingness to spend, according to the results of a survey out on Thursday.
The GfK institute’s consumer sentiment index, based on a survey of around 2,000 people, fell to -6.7 this month, from a revised -3.2 in October.
According to GfK consumer expert Rolf Buerkl, although retail shops remained open, the closure of bars, restaurants, hotels and entertainment venues since the beginning of the month, impacted consumer sentiment.
Buerkl added that rising coronavirus cases are heightening uncertainty, so Germans are more reluctant to spend.
“The hopes for a rapid recovery that arose in early summer have definitely been dashed,” Buerkl said.
“Growing uncertainty has once again led to an increase in propensity to save, another factor which has contributed to the decline in the consumer climate,” he added.
Reuters reports business morale in Germany also declined in November, indicating the economy will contract in Q4 due to the renewed restrictions, the Ifo institute said earlier this week.
On news that infection numbers are rising in Germany, close to one million, Buerkl went on to add: “How the infection rate develops in the coming weeks will play a decisive role in determining whether the consumer climate will be able to stabilise again. Only a significant decrease in the number of infections and an easing of restrictions will restore a more optimistic outlook."
In addition, income expectations suffered another setback this month, due to the weakening economic forecast.
The indicator declined to 4.6, a 41-point loss compared to the same time last year.
Despite significant support from the government, businesses in the hospitality, hotel, events and tourism sectors are facing a battle for survival.
This is heightening job loss concerns and, as such, straining income expectations.