German Consumer Confidence Set to Drop Sharply in February Amid Lockdown -GfK
--German consumer sentiment is set to fall to minus 15.6 points
--Economic expectations, income expectations and propensity to
buy fell in January
--Propensity to buy had a decline similar to the one seen in
April, during the first lockdown
By Maria Martinez
German consumer sentiment is set to plunge in February due to
the tightening of coronavirus restrictions, market-research group
GfK said Wednesday.
"Consumer sentiment is facing difficult challenges in the first
quarter of this year," Rolf Burkl, consumer expert at GfK,
GfK's forward-looking consumer sentiment index is set to drop to
minus 15.6 points in February from a revised minus 7.5 points in
January. The decline is much larger than that predicted by
economists polled by The Wall Street Journal, who expected consumer
sentiment to fall to minus 7.8 points.
"The recent decision to extend the strict lockdown measures has
dashed hopes of a speedy recovery for consumer sentiment," 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.
The three subindexes had losses in January. Propensity to buy is
in free fall, while both economic and income expectations have
registered moderate declines.
Propensity to buy is at zero points in January--a decrease of
36.6 points on the previous month, which is comparable to the drop
of 36 points recorded in April.
"The closure of the restaurant trade and large portions of the
retail sector in mid-December 2020 has had a similarly damaging
effect on consumer spending as that of the first lockdown last
spring," Mr. Burkl said.
The strict lockdown has also impacted income expectations, with
the indicator dropping to minus 2.9 points in January from 3.6
points in December.
The extension of the lockdown to mid-February has also made it
more likely that the industries affected will be hit by a wave of
bankruptcies, fueling fears of job losses among employees, which in
turn is affecting income expectations, GfK said.
In contrast to propensity to buy and income expectations,
economic expectations have only had slight decreases this month,
with the indicator dropping to 1.3 points in January from 4.4
points the prior month.
For consumer sentiment to recover sustainably, infection rates
will need to decrease more than they have to date so that the
measures can be relaxed significantly, Mr. Burkl said.
"This means that we will need to wait a while before we see the
recovery that many had been hoping for this year," he said.
Write to Maria Martinez at firstname.lastname@example.org
(END) Dow Jones Newswires
January 27, 2021 02:14 ET (07:14 GMT)
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