German consumer sentiment is set to sink early in the new year, according to a survey which bucks growing expectations for a revival in household spending to ease the economy's dependence on export-led growth.
The forward-looking survey of about 2,000 Germans by market research group GfK predicted spending habits would break a string of six straight monthly gains in January, edging lower to a level of 5.4 - equivalent to half a percentage point of growth in household consumption over January 2010.
The detailed data from December, published today, showed dampened expectations for robust wage growth combined with higher fuel and energy prices depressed overall sentiment, resulting in an indicator that fell short of the market's 5.7 forecast.
The Nuremberg-based market research group argued, however, that the willingness of households to raise their consumption merely took a breather from overheated levels seen in the previous month.
In an interview with Reuters, GfK chief executive Klaus Wuebbenhorst said Germany was in the middle of a "winter fairy tale" due to a forecast 2.5 per cent year-on-year increase in Christmas sales.
"For next year we forecast plus-1 per cent overall (for consumer spending) that's based on a very low unemployment rate in Germany, low inflation and a good increase in salaries. So German consumers will have more in their pockets than last year," he said.
The minor correction in sentiment appears to contradict comments over the weekend from Germany's retail industry association HDE, which claimed snow storms had not deterred households from shopping during the critical Christmas holiday season.
The GfK consumer sentiment reading also departs notably from the continued improvement in German business morale, which rose in December to its strongest level since 1991.
Some economists are even beginning to believe Germany could grow by over 3 per cent in 2011, less than the 3.4 per cent the government expects for this year but nonetheless a blistering pace of growth for Europe's dominant economy.
Reuters
