Investor Alert

Nov. 26, 2020, 2:41 a.m. EST

German consumer sentiment set to decline

By Maria Martinez

German consumer sentiment is set to fall in December, as the partial lockdown has dampened the optimism of German consumers, market-research group GfK said Thursday.

GfK's forward-looking consumer-sentiment index is set to fall to minus 6.7 points in December from a revised minus 3.2 points in November. Economists surveyed by The Wall Street Journal had forecast minus 5.5 points for December.

A rapid increase in infection rates prompted a second lockdown by the German government, albeit with less stringent restrictions than faced during the lockdown earlier this year.

Although stores will remain open, the renewed shutdown of the hotel, restaurant and events industries, as well as the already struggling tourism industry, has had a serious impact on the consumer climate, said Rolf Buerkl, consumer expert at GfK.

"As a result, any hope we still had in early summer of a rapid recovery is now lost," Mr. Buerkl said.

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 November, the three subindexes suffered losses.

Economic expectations among Germans was the biggest loser among sentiment indicators in November, falling to minus 0.2 points from 7.1 points in October.

"Lockdown-lite came into effect at the start of November and with it, consumers' hopes of a sustained recovery of the German economy have faded," GfK said.

Consumer income expectations suffered a significant decline, falling to 4.6 points in November from 9.8 points the previous month.

Propensity to buy underwent a mild decline and was at a better level than the two other indicators, falling to 30.5 points in November from 37.0 points in October.

"How the infection rate develops in the coming weeks will play a decisive role in determining whether the consumer climate will be able to stabilize again," Mr. Buerkl said, adding that only a significant decrease in the number of infections and an easing of restrictions will restore a more optimistic outlook.

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

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