German consumer confidence has fallen for the fourth month in a row.
A consumer sentiment index looking ahead to February dropped to 3.2, from 3.4 in January. The figure is based on a survey of 2,000 Germans and the research group responsible for it believes the main factor is fear of unemployment. Rolf Buerkl, head of research at GfK, said:
We have said repeatedly that consumption will be weak in 2010. Consumers will definitely feel the pinch after the recent financial crisis. The main reason is the expected increase in unemployment, which always has a negative impact on consumption.
The spectre of job cuts still looms large over Europe’s biggest economy and hundreds of thousands of workers have been shifted to part-time contracts.
Government stimulus measures such as the ‘cash for clunkers’ car scrappage scheme are winding down and companies are under pressure to shed jobs in order to return to profitability.
The government has cut taxes for this year but with the job market so uncertain, Germans are likely to save that little extra rather than spend it.