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January 26, 2010

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Consumer confidence declines in Germany

FEARS that Germany's economic recovery is weakening and unemployment will rise have led to a fourth consecutive monthly slip in consumer confidence, a survey found yesterday.

The GfK research group said its forward-looking consumer climate index for February stood at 3.2 points - down from 3.4 in January, a figure that was revised upward from an initial reading of 3.3.

Germany's economy, Europe's biggest, contracted by 5 percent last year, its worst performance since World War II. It has returned to modest growth, and is expected to expand about 1.5 percent this year.

GfK said that consumers' economic expectations were stable this month, and their income expectations slipped - although both were far above the levels of a year ago.

"In particular, the threat of a rise in unemployment and the slight weakening in German economic recovery are playing a significant role" in cooling consumer confidence, the group said. "In terms of consumption, 2010 is therefore likely to be a more difficult year than 2009."

The survey found a rise this month in consumers' propensity to buy. A subindex that measures this gained 4.2 points this month to 25.4.


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