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Partial Lockdown Dampens German Consumer Confidence: GfK

germany may25 26nov20 lt

German consumer sentiment deteriorated notably due to the partial lockdown, survey results from the market research group GfK showed Thursday.

The forward-looking consumer sentiment index fell to -6.7 in December from revised -3.2 in October. The expected reading was -5.0.

"Though stores will remain open, the renewed shutdown of the hotel, restaurant and events industry - as well as the already struggling tourism industry - has had a serious impact on the consumer climate," Rolf Bürkl, consumer expert at GfK, said.

"As a result, any hope we still had in early summer of a rapid recovery is now lost. Growing uncertainty has once again led to an increase in propensity to save, another factor which has contributed to the decline in the consumer climate," Bürkl added.

All sub-components of the confidence index weakened in November. The economic expectation indicator fell by 7.3 points to -0.2 in November. This was the lowest figure since May.

With the new restrictions, consumers' hopes of a sustained recovery of the German economy have faded. Exports are unlikely to provide a significant boost to the German economy in months ahead as most of its trading partners have been much harder hit by Covid-19, GfK said.

The income expectations index declined 5.2 to 4.6 in November.

The second lockdown has been a major blow to businesses in the hospitality, hotel and events, and tourism industries. Despite government support, many firms are set to file for bankruptcy. The agency noted that it is fueling job loss fears for many employees and ultimately placing a strain on income expectations.

The propensity to buy dropped 6.5 points to 30.5 in November. Concerns over job losses as a result of a possible increase in the number of bankruptcies will also impact propensity to consume. The survey was carried out between November 5 and 16.

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