German GfK Consumer Confidence Set To Hit Record Low

German consumer confidence is set to reach a historic low in May due to the coronavirus pandemic and the control measures taken to curb the virus, survey results from the market research group GfK showed Thursday.

The forward-looking consumer sentiment index fell to -23.4 in May from revised 2.3 points in April.

The survey was conducted in the first two weeks of April, when consumers started feeling the full impact of the containment measures.

"Given that the economy is largely frozen, this unprecedented cliff dive is hardly surprising," Rolf Bürkl, GfK consumer expert, said. "Retailers, manufacturers and service providers must prepare for a tough recession in the immediate future."

Consumer climate is expected to face tough time in coming months too, Bürkl noted.

Production shutdowns, closures of businesses and bars and restaurants have brought economic activity almost to a standstill in many sectors. Disruptions in supply chains are also hampering production in many areas of industry.

As consumers expect the economy to sink into a tough recession, the economic expectations index slipped to -21.4 in April from -19.2 in March. This was the lowest since May 2009 during the financial crisis.

The income expectations index declined 47.1 points to -19.3 points. This was the biggest monthly fall since data collection began in 1980.

The propensity to buy fell 36 point to -4.6 in April from 31.4 in March. Uncertainty and fear of job losses weighed consumption.

Meanwhile, the decline in the consumer climate was also being worsened by a large jump in propensity to save in April.