German consumer confidence will hold steady in October as a less pessimistic economic outlook offsets falling income expectations, GfK SE said.
The market-research company in Nuremberg forecast today that its consumer-sentiment index, based on a survey of about 2,000 people, will remain at 5.9 for a second straight month, matching the median of 25 economist estimates in a Bloomberg News survey. The index was last higher in March 2011.
German business confidence unexpectedly declined to the lowest in more than two and a half years in September as recessions in at least five of the 17 countries using the euro curb export demand. Still, the Bundesbank expects Europe’s largest economy to continue to grow this year as unemployment at a two-decade low boosts consumption.
“The fear of German consumers that the economy will slip into recession did not increase further,” GfK said in a statement. “But uncertainty of consumers with regard to their future financial prospects has risen in recent weeks.”
The gauge of economic expectations rose to minus 17.2 in September from minus 18.9 in August, while an index measuring income expectations dropped to 23.9 from 31.6, GfK said. A measure of willingness to buy remained at 33.1.
Inflation accelerated for the first time in six months in August after oil prices surged and unemployment edged higher for a fifth straight month. Economic growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first.
With exports to debt-strapped countries like Greece, Spain and Italy dwindling, the “German economy is finding it ever more difficult to escape the wide-spread recessionary movement throughout Europe,” GfK said. “Consumption therefore continues to truly fulfill its role as a reliable supporting pillar for the economy.”
The German economy made a “very good start” to the third quarter and recent data “speak in favor of Germany continuing its upward course for now,” the Bundesbank said in its monthly report yesterday. “Still, the outlook for future economic developments continues to be subject to great uncertainty.”