Sept. 23, 2020, 2:13 a.m. EDT

German consumer sentiment seen flat in October

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By Maria Martinez

German consumer sentiment is set to stabilize in October, following a clear downturn in the previous month, market-research group GfK said Wednesday.

GfK's forward-looking consumer-sentiment index is set to rise to minus 1.6 points in October from a revised minus 1.7 in September. Economists surveyed by The Wall Street Journal had forecast minus 0.5 points for October.

Despite rising infection figures and the increasing fear of tighter restrictions caused by the pandemic, the consumer climate has stabilized, GfK said.

"The extensive support packages for business and consumers are clearly suitable measures to help Germany emerge from the worst recession since the war," said Rolf Buerkl, consumer expert at GfK.

GfK uses data from three subindexes from the current month to derive a sentiment figure for the coming month, measuring economic expectations, income expectations and propensity to buy. In September, both economic and income expectations are on the rise, while propensity to buy has taken a hit.

Consumer income expectations are currently making a significant contribution to the stable development of the consumer climate, rising to 16.1 points in September from 12.8 points in August.

Economic expectations rose for the fifth time in a row, standing at 24.1 points in September from 11.7 points in August.

"Consumers think that the German economy is clearly on the road to recovery after the sharp decline in spring due to coronavirus," GfK said.

A stable labor market and the falling number of short-time workers support the rising economic optimism but GfK warned that for sustained growth, it is also necessary for exports to recover significantly.

On the other hand, the propensity to buy stalled after four consecutive rises. The indicator dropped to 38.4 from 43.7 in August.

"The further course of the infection rate in Germany and the situation in the labor market will decide whether the previous month's downturn remains a flash in the pan and whether consumer mood is able to recover in the coming months," Mr. Buerkl said.

Write to Maria Martinez at maria.martinez@wsj.com

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