German consumer confidence slumps

German consumer confidence slumps

2014-09-26 12:15

Berlin - German consumer confidence is set to fall for the second consecutive month in October, a survey released Friday showed, weighed down by worries over mounting tensions in the Middle East and the crisis in Ukraine.

Consumer confidence in Europe's biggest economy will fall to a lower-than-forecast 8.3 points in October, from 8.6 in September, the Nuremberg-based GfK research group said as it released its forward-looking indicator.

Analysts surveyed by dpa-AFX had expected the GfK indicator to edge down to 8.5 next month.

"It is above all the various international crises which are behind a slowdown in the consumer climate at present and the first signs of uncertainty are beginning to show among German consumers," the GfK.

Based on a survey of about 2 000 households, the October survey showed growing concerns among consumers about the economic fallout from geopolitical risks in the Middle East and Ukraine.

Analysts are worried that the crises could hit Germany's exports and lead to companies cutting back investment.

Concerns about the economic outlook resulted in a fall in consumers' income expectations as well as in their willingness to buy, the GfK said.

This was despite the recent rise in German incomes and the solid performance of the nation's jobs market.

The weaker consumer confidence survey followed the publication on Wednesday of Germany's closely watched business confidence indicator, which fell to its lowest level in nearly 18 months in September.

"Companies are also evidently no longer confident that there will be strong growth in the second half of the year," GfK said.

"Should the (international) crises escalate further, a deterioration in the general conditions in Germany, which have so far remained excellent, cannot be ruled out," it said.

"In this case, there is a danger that private consumption would no longer fulfill its role as a key pillar of the German economy," it said.