German consumer sentiment has fallen for the third month in a row, with shoppers particularly wary of making large purchases, the GfK economic research institute said today.
GfK's consumer index, the result of a survey of some 2,000 people, suggested that 'the consumer climate in Germany will cool slightly at the beginning of the New Year,' slipping to 3.3 points for January from a revised 3.6 points in December.
GfK makes projections for the month to come based on the data it obtains. The reason for the decline was a sharp drop in a sub-index which measures intentions to make major purchases, itself the result of expectations that energy prices would begin to rise, the institute said.
Two other sub-indices, one which measures expectations of personal revenues and another of the economy in general, rose due to better than expected employment data and measures to ease taxes on families.
'Since the labour market has proven to be very robust this autumn, consumers' economic expectations have recovered a little and recorded a slight increase in December,' GfK said.
In addition, German Chancellor Angela Merkel got a tax relief package worth €8.5 billion through parliament last week despite serious reservations about the country's shaky public finances. The package will ease the tax burden on families with children.
German Finance Minister Wolfgang Schaeuble said yesterday that the government would unveil a major savings plan by mid-2010 to put the country back on the road to fiscal health.
Schaeuble said the savings package would begin whipping the country's public finances back into shape after Berlin approved massive stimulus plans this year to pull Germany out of recession.
Meanwhile, German manufacturers will invest just a little more next year, the Ifo economic research institute said today, a development that could hold back economic recovery.
The companies 'are planning only a slight increase of 2% in their investments for the coming year,' a statement said following a survey of 1,800 firms in a key sector of the biggest European economy.
Smaller firms in particular were set to scale back investment plans owing to high levels of unused capacity, 'one of the main reasons for the weak economic recovery,' Ifo said.
For 2009, the economic think-tank's survey forecast an investment decline of 22% from the level a year earlier, with the strongest declines reported by makers of capital goods, those used to produce finished products.
Car makers were expected to cut investment by one-quarter this year in response to slumping sales. Ifo found that the most important motive for planned investment this year and next would be to replace current assets, whereas expansion investments were tipped to play a weaker role in 2010.
