BERLIN (Reuters) – The mood among German consumers fell to its lowest in three years heading into November, a survey showed on Friday, as job losses in the auto industry and financial services made shoppers more pessimistic about the outlook for Europe’s biggest economy.
The consumer sentiment indicator, published by the Nuremberg-based GfK institute and based on a survey of around 2,000 Germans, fell to 9.6 going into November, the lowest reading since November 2016.
The reading was lower than the 9.8 forecast in a Reuters poll. The October reading was revised down to 9.8 from a previously reported 9.9.
Trade conflicts and fears that Britain could crash out of the European Union without an agreement have contributed to a recession among Germany’s export-dependent manufacturers, and the slowdown is starting to spread to services.
Europe’s largest economy, which has been mainly relying on consumption and state spending for growth, is expected to dip into recession in the third quarter.
Chancellor Angela Merkel’s coalition of conservatives and Social Democrats (SPD) has resisted calls for a stimulus package despite signs that the job market is weakening and fears that the auto industry will shed thousands of jobs.
“These events have dampened the mood of consumers again and optimism is dwindling,” GfK researcher Rolf Buerkl said in a statement.
“Nevertheless, private consumption will remain an important pillar for the German economy this year – assuming that the current crises do not escalate further and both policy and the economy counter the rising fear of job losses.”
GfK said a sub-index measuring economic expectations fell to its lowest since December 2012, as consumers fear that a global slowdown could hit exports and spell more hardship for manufacturers.
German carmakers, which are struggling to adapt to tougher emissions standards and spending billions on a shift to electric cars, could be hit most by a worsening of the global economy, GfK added.
“Several automobile manufacturers as well as their suppliers have already announced redundancies,” it said. “This loss of jobs at car manufacturers will be further intensified in future by the forthcoming transition to electro-mobility.”
Consumers, however, maintained a relatively high inclination to buy, GfK said, suggesting that the economic downturn was not discouraging Germans from taking their wallets out.
The European Central Bank kept the door open for even more stimulus on Thursday, with inflation in the euro zone still less than half the central bank’s target and growth barely holding in positive territory.
The bank’s easy-money policy and record-low interest rates will continue to encourage usually frugal Germans to spend instead of stacking their cash in bank accounts that yield no interest, which should keep supporting German growth.
NOV 19 OCT 19 NOV 18
Consumer climate 9.6 9.8 10.4
Consumer climate components OCT 19 SEPT 19 OCT 18
– willingness to buy 51.7 55.1 55.2
– income expectations 39.0 46.8 51.8
– business cycle expectations -13.8 -9.0 16.1
NOTE – The consumer climate indicator forecasts the development 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 in comparison with the same period a year ago.
According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent 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 the assessment of those questioned of the general economic situation in the next 12 months.
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(Reporting by Joseph Nasr, edithing by Larry King)