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October 27, 2009

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German consumer confidence declines

GERMAN consumer confidence for November fell slightly for the first time in more than a year due to worries about job losses, a forward-looking survey by the GfK market research group said yesterday.

The group, based in Nuremberg, said its overall indicator for November fell to 4 points from a revised 4.2 points in October as more Germans worried that unemployment may grow in coming months.

"As a result of reports over the past few weeks that the economy in Germany could recover more quickly than previously forecast, the economic outlook is being assessed more optimistically," GfK said in a report.

"However, not unexpectedly, Germans are viewing their own economic situation with slightly less confidence against the background of increasing problems on the labor market, although the feared slump in employment has so far failed to materialize," the group said.

GfK also said consumers' propensity to buy had also decreased amid expectations that income would be down.

"One reason for this is certainly the discontinuation of the scrapping bonus at the end of September," it said, referring to Germany's 5 billion euros (US$7.5 billion) cash for clunkers program.

The economic expectations reading jumped more than 5 points in October to 8.7 points from 3.4 points the month before, its seventh straight increase.

But consumers' income expectations dropped to 12.9 points from 16 points in October, halting four months of gains.

"Despite this slight setback, private consumption remains the major source of support for the German economy this year, since investments and exports will record large decreases at the close of 2009," said GfK.


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