German consumer confidence is set to ease for a fourth straight month in December, as the high influx of migrants raise fears of unemployment and thus hurt economic and income expectations in the biggest euro area economy.
The forward-looking consumer confidence index dropped to 9.3 from 9.4 in November, results of a monthly survey by GfK showed Friday. Economists had expected a score of 9.2.
The GfK Consumer Climate MAXX survey is based on approximately 2,000 consumer interviews conducted each month on behalf of the European Commission. The latest survey was concluded on November 13, when the Paris terrorist attacks occurred. Hence, any possible impacts could not be taken into account in November’s results, GfK said.
“The consumer climate will be negatively affected if the events in Paris and other potential attacks or attempted assaults cause a sharp increase in consumer uncertainty or result in a significant number of people avoiding crowded areas such as pedestrian zones”, the agency added.
The economic expectations index shed 2.4 points to -5.3 in November. The latest decline was much lower than in the previous two months when losses of more than 9 and 10 points were recorded, GfK said. The indicator has consolidated its position in the negative value range, remaining under its long-term average of 0 points, it added.
The survey also showed that just under 40 percent of German citizens in November expected unemployment to rise in the near future, while only 8 percent of respondents estimated that it would fall.
Among those who expect an increase in joblessness, 69 percent attributed it to the refugee crisis, and the steady high stream of asylum seekers. This suggested a stabilization as the ratio was 70 percent in October.
Seasonal effects such as the weather, a perceived worsening in the economic and employment situations, and the Volkswagen scandal were minor reasons, the survey said.
“The economic mood among German citizens currently paints a much more pessimistic view than the impression created by the actual prevailing conditions and expert assessments of them,” the GfK said.
The income expectations indicator also eased in December, shedding 3.3 points to reach 44.4. However, the level remains particularly high in comparison to the economic expectations indicator.
This implies that although consumers predict unemployment to rise, they still do not believe that they themselves will be affected by this, and are therefore not concerned about losing their jobs, the market research group said. GfK has predicted private consumption growth of 1.5 percent for 2015.
Meanwhile, the willingness-to-buy indicator of the survey rose in November after declining for five months running. The measure added three points to a total of 48.9 points, which the GfK called an extremely high level that suggests that the propensity to consume is still very pronounced despite the economic uncertainty. Further, Destatis had reported that retail sales rose 2.7 percent in the first nine months of the year.
The main drivers of this strong willingness to buy are the favorable employment conditions and positive development in income enjoyed by German households, GfK said. Further, low energy-price driven low inflation is also underpinning the purchasing power of consumers.
The material has been provided by InstaForex Company – www.instaforex.com