German consumer confidence stabilizes

BERLIN — German consumers' economic expectations for January stabilized at very low levels — despite the economy falling into recession — as slower inflation offset growing fears of unemployment, a survey showed Monday.

The GfK research group said its forward-looking consumer climate index for January stood at 2.1 points — flat against a revised 2.1 points in December.

The part of the index measuring Germans' income expectations, however, dropped markedly after four consecutive increases. The survey released Monday showed income expectations down 8.5 points to minus 15.4.

"Reduced production, cuts in working hours and announcements of potential redundancies are increasingly leading to consumers feeling themselves to be personally affected by the crisis," GfK said in a statement.

An index measuring consumers' propensity to buy rose slightly to minus 6.3, well below its longtime average of 0, but still a welcome sign after analysts feared households would react to the crisis by curtailing their holiday shopping.

"All in all, retailers are satisfied with Christmas sales after the fourth advent weekend," said Alexander Koch, an economist at UniCredit in Munich.

Koch said static consumer confidence is a mixed blessing, however, because it remains far below traditionally healthy levels.

"The tug of war between declining inflation and rising unemployment fears keeps consumer climate subdued well below its long-term average of around 10," Koch said.

GfK's monthly survey is based on interviews with some 2,000 consumers.

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