JUNE 23 2010 10:55h
Germany austerity measures have unsettled consumers, but a resistant labour market and rising exports are underpinning sentiment, the closely watched GfK confidence survey showed on Wednesday.
The latest poll of some 2,000 people in Europe's biggest economy resulted in an indexed 3.5 points, the same level as for June, the GfK research group said in a statement.
Although consumers' propensity to head to the shops showed a clear rise, in part thanks to the 2010 World Cup in South Africa, talk of a savings programme to rein in Germany's public deficit and debt has undermined sentiment.
"Discussions about increasing financial strain as a result of the upcoming austerity package are increasingly unsettling consumers," a GfK statement said.
Improved economic and job market indicators were unable to substantially brighten consumers' moods, though their assessment of the current economic environment did mark a modest rise.
"The continuing positive reports from the labour market are not the only factor buoying up Germans' economic expectations. The upward trend in exports is having a particularly positive effect on economic growth," GfK said.
German Chancellor Angela Merkel has unveiled an austerity plan that foresees more than 80 billion euros (98 billion dollars) in spending cuts between next year and 2014.
The main effect of the measures was seen in consumers' assessment of their personal situation, which tumbled from 23.7 points to 8.2 points on concerns over heavier financial burdens.
"The fact that overall consumer sentiment did not deteriorate further after the announcement of the consolidation program by the German government two weeks ago is seemingly good news," UniCredit chief German economist Andreas Rees said.
For ING senior economist Carsten Brzeski, "the worst enemy of German private consumption is uncertainty and fear."
With the government laying its cards on the table, further improvement in the labour market could "end the miserable private consumption performance soon," he added.
German consumption has contracted for three quarters running.