German consumer morale fell heading into November as fears about a second coronavirus wave that is hitting Europe’s biggest economy made Germans less willing to open their wallets, a survey showed on Thursday.
The GfK institute said its consumer sentiment index, based on a survey of around 2,000 Germans, fell to -3.1 heading into November from a revised -1.7 in the previous month.
The reading missed a Reuters forecast for a narrower drop to -2.8.
GfK consumer expert Rolf Buerkl said optimism among German consumers faded in October with coronavirus cases soaring in Germany, fuelling fears of another lockdown to contain the outbreak.
“The recovery in sentiment from early summer this year has come to a standstill, leaving the consumer climate to slide again,” Buerkl said.
Germany’s infection rates have been accelerating and rose by more than 10,000 in a single day for the first time on Thursday, as the federal and state governments struggle to agree on ways to contain a second wave of coronavirus infection.
Buerkl said another weekly GfK survey showed that three quarters of Germans saw COVID-19 pandemic as a “big or very big threat”, with more than half worried about the pandemic’s impact on their personal future. He said consumers’ prospect have never been so dim since that survey started in April.
The drop in consumer sentiment was mainly driven by falling economic and income expectations and a rising propensity to save.
“Consumers apparently assume that the much more active infection process in Germany will slow down the previously hoped for rapid recovery of the German economy,” Buerkl said.
The German government currently expects gross domestic product to shrink in 2020 by 5.8% before rebounding by 4.4% next year, assuming that the pandemic will remain under control.
The country’s leading economic research institutes last week forecast a slower recovery than originally predicted, with a rebound being held back by sectors particularly hard hit by social distancing restrictions such as restaurants, tourism, events and air travel.
Buerkl said a stabilization in consumer sentiment in the coming months would depend on infection rates.
Reporting by Riham Alkousaa