BERLIN (Reuters) – German consumer morale is expected to fall more sharply than expected in December, with households worried about the impact of job cuts, according to the consumer confidence index, published on Wednesday by the institute GfK and the Nuremberg Institute for Market Decisions (NIM).

The consumer sentiment index fell to -23.3 points in December compared to -18.4 points (revised) the previous month and a consensus of -18.6.

The figure for December marks a low point since May.

“The last weeks of the year end with a significant decline in the consumer climate,” summarizes Rolf Buerkl, analyst at NIM.

“The reasons for this are certainly the job cuts mentioned in the industry and the relocation of production, as well as the increase in the number of bankruptcies.”

Large companies, such as Bayer, Volkswagen and Thyssenkrupp, have announced job cuts in recent months, as the momentum in Europe’s largest economy struggles to recover.

“We expect consumer confidence to recover once the domestic political situation stabilizes. Real disposable incomes will continue to recover as wage growth continues to outpace inflation,” notes Melanie Debono, senior economist for Europe at Pantheon Macroeconomics.

The German government forecasts an economic contraction of 0.2% in 2024, the second consecutive year of decline in activity.

The collapse of Germany’s governing coalition in early November has increased uncertainty and could worsen the country’s economic woes in the months to come.

Given the uncertainty, private households are saving more, notes DIW expert Laura Pagenhardt.

The DIW economic barometer fell this month to 83.7, the economic institute said on Wednesday.

“Growing uncertainties are poisoning German industry,” concludes Laura Pagenhardt.

(Written by Miranda Murray, Maria Martinez and Christian Kraemer, Corentin Chappron, edited by Blandine Hénault)

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