German Consumer Confidence Remains Steady

GfK research group said its forward-looking consumer climate index for June remained at 2.5 points, unchanged from May and April levels.

BERLIN (AP) -- German consumer expectations for the coming month held steady in May, as anxiety over job security weighed on broader hopes that the economy may be improving, according to a survey released Tuesday.

The GfK research group said its forward-looking consumer climate index for June remained at 2.5 points, unchanged from May and April levels.

The economic crisis has had little impact on consumer confidence in recent months, but income expectations dropped amid job loss fears, and the overall indicator remains low.

"Consumer sentiment has yet to face a real test when confronted by the anticipated rise in unemployment," the GfK said in a statement.

Germany's export-driven economy went into recession in the third quarter of last year. Unemployment is rising, but job losses have not yet spiked dramatically. Germans' income expectations dropped 1.3 points to -9.3 points in May, the survey found.

Meanwhile, improvement in consumers' expectations for the economy suggests that households believe steep declines in Europe's largest economy have bottomed out and could stabilize later this year. The survey found expectations improving 2.9 points to -28.3 points.

"In spite of the ongoing marked economic pessimism, consumers are nevertheless assuming that the worst is behind us," the statement said.

The Federal Statistical Office in Wiesbaden said Monday that Germany's economy shrank 3.8 percent in the first quarter, confirming preliminary data released earlier this month.

The steep drop in the January-March period over the previous three months is the largest since record-keeping began in 1970. The office said the decline was led by a 9.7 percent slump in exports over the previous quarter.

Timo Klein, an IHS Global Insight economist, agreed that the first quarter was likely the trough of the downturn, but cautioned that the market for Germany's crucial exports might not fully recover for some time.

"Given similarly large economic problems among most of Germany's key trading partners, it will probably take several years before the export levels of 2007 are reached anew," Klein said.

The government has forecast that Germany's economy will shrink a huge 6 percent this year, followed by a feeble 0.5 percent return to growth in 2010.

Germany's economy grew 1.3 percent in 2008, about half as much as the previous year.

The GfK survey is based on interviews of about 2,000 consumers.

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