BERLIN (Reuters) – The mood among German consumers deteriorated unexpectedly heading into January, a survey showed on Friday, suggesting that household spending in Europe’s largest economy could weaken at the beginning of next year.
The consumer sentiment indicator, published by the Nuremberg-based GfK institute and based on a survey of around 2,000 Germans, edged down to 9.6 from 9.7 in December. A Reuters poll of analysts had predicted an increase to 9.8.
Household spending has turned into a steady and reliable driver of growth in Germany helped by record-high employment, inflation-busting pay hikes and historically low borrowing costs, providing a buffer against trade-related problems.
GfK researcher Rolf Buerkl said consumers were more pessimistic about the overall economic growth outlook. They also scaled back their personal income expectations, with GfK’s sub-indicator falling to the lowest level in more than six years.
“News about job cuts in some industrial sectors, such as the car industry and automobile suppliers, are leading to less optimistic income expectations,” Buerkl said.
Germany’s main automobile industry body VDA said earlier this month it excepted global car sales to fall by 5% this year and it warned of more job cuts in 2020 as a result.
The Ifo institute expects the German economy to pick up steam in the fourth quarter, predicting a quarterly growth rate of 0.2% following a 0.1% expansion in the third quarter.
For 2019 as a whole, the government forecast 0.5% growth, which would be the weakest performance since 2013. It predicts a modest rebound with 1.0% growth next year.
(Reporting by Michael Nienaber, editing by Thomas Escritt)