A survey released Tuesday showed that consumer confidence in Germany, Europe's biggest economy, continued to decline amid fears of job losses.
The survey from the GfK research group found a third consecutive monthly slip in consumer confidence in the country, even though German business confidence has been rising for months.
The Nuremberg-based group's forward-looking consumer climate index for January stood at 3.3 points — down from a revised 3.6 points in December and 4 points in November.
Besides fears of job losses in the new year, the "expectation of rising prices in the energy sector is currently having a dampening effect," GfK said in its monthly report.
"Looming uncertainty as a result of worsening conditions on the labor market is leading to a perceptible increase in the propensity to save. This is also weighing on the consumer climate," it added.
The concern comes even though the jobless rate in November unexpectedly narrowed by 0.1 percentage points to 7.6 percent, with some 3.2 million Germans out of work in a population of approximately 82 million.
Despite the decline in consumer confidence, business confidence in Germany is decidedly on the upswing.
Last week, the Ifo business climate index rose to 94.7 points — its highest level since July 2008 — from 93.9 points in November. The increase was modestly higher than market expectations and stoked hopes that the recovery is on track.
Germany's economy returned to modest growth in this year's second quarter. The government has forecast it will grow by 1.2 percent next year after contracting by 5 percent in 2009.
Last week, in an effort to boost spending, Germany's upper house of parliament approved tax cuts for companies and families -- the final legislative hurdle for the plan, which is to go into effect in January.
The so-called "growth acceleration law" is supposed to bring tax relief of around 8.5 billion euros ($12.1 billion) a year.
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