German Consumer Sentiment Tumbles as Job Cuts and Economic Uncertainty Weigh
German consumer sentiment plummeted in the last month of the year, with households growing increasingly pessimistic about their income prospects, a survey showed on Wednesday. The consumer sentiment index, published by GfK and the Nuremberg Institute for Market Decisions (NIM), fell to -23.3 points in December, the lowest point since May and similar to levels seen at the end of last year when Germany’s economy was contracting.
The decline was attributed to reports of job cuts, the relocation of production abroad, and an increase in bankruptcies. Big-name companies such as Bayer, Volkswagen, and Thyssenkrupp have announced job cuts in recent months as Europe’s largest economy struggles to recover. The survey also showed that consumers’ initial hopes for an economic recovery have dissipated, with year-ahead expectations declining for a fourth month in a row to its lowest since February.
The collapse of Germany’s ruling coalition earlier this month, paving the way for snap elections in February, has increased uncertainty, which could lead to more economic pain in the months ahead. As a result, private households are saving more, according to DIW economic expert Laura Pagenhardt.
The DIW economic barometer fell to 83.7, moving further away from the neutral mark of 100. “The ever-increasing uncertainties are poison for German industry,” Pagenhardt said.
The GfK survey period was from October 31 to November 11, 2024. The consumer climate indicator forecasts the progress of real private consumption in the following month. An indicator reading above zero signals year-on-year growth in private consumption, while a value below zero indicates a drop compared with the same period a year earlier.
