BERLIN (Reuters) - German consumer morale deteriorated sharply heading into April to hit its lowest level since 2009, a survey showed on Thursday, suggesting that the coronavirus pandemic is putting the brakes on household spending in Europe’s largest economy.
The Nuremberg-based GfK institute said its survey of around 2,000 Germans showed consumer sentiment falling to 2.7 points from a revised reading of 8.3 points a month earlier.
This was the lowest reading since May 2009 and undershot a Reuters poll of analysts who had expected a much less pronounced drop to 7.1 points.
“In light of the current development, we are withdrawing our consumer forecast of 1 percent growth for 2020,” GfK researcher Rolf Buerkl said.
“Retailers, manufacturers and service providers must prepare for a recession,” Buerkl said, adding that GfK could only give a new forecast once there is clarity how long measures to contain the spread of the virus will remain in place.
Consumers’ expectations regarding their personal income as well as the overall economic development decreased sharply, the GfK survey showed. The propensity to buy also deteriorated.
“Retail as a whole is facing tough times ahead,” Buerkl said, though the pandemic was also providing drug and grocery stores with a jump in sales of 14 percent on the month.
This growth was primarily driven by stock-piling purchases which led to an increase in sales of up to 200 percent in some categories, he added.
April 20 March 20 April 19
Consumer climate 2.7 8.3 10.2
Consumer climate components March 20 Feb 20 March 19
- willingness to buy 31.4 53.6 49.1
- income expectations 27.8 41.2 54.6
- business cycle expectations -19.2 1.2 8.1
NOTE - The consumer climate indicator forecasts the development of real private consumption in the following month. An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop in comparison with the same period a year ago. According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1 percent in private consumption. The “willingness to buy” indicator represents the balance between positive and negative responses to the question: “Do you think now is a good time to buy major items?” The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months. The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months. ((FOR BACKGROUND AND HISTORICAL DATA, DOUBLE-CLICK ON ))
Reporting by Michael Nienaber; Editing by Madeline Chambers