(Adds economists' reaction, detail)
By Paul Carrel and Kerstin Gehmlich
BERLIN, Dec 22 (Reuters) - German consumer morale should hold steady going into 2009 as slowing inflation buoys households' readiness to buy despite growing concerns about the economic outlook, the GfK market research group said on Monday.
The Nuremberg-based GfK's forward-looking gauge of
sentiment, based on a survey of 2,000 Germans, was unchanged at
2.1 for January from a downwardly revised 2.1 for December and
in line with analysts' forecast.
"Consumer propensity to buy benefited from the reduced rate of inflation to end 2008 slightly up. With this, consumer sentiment remains constant at the start of the new year, albeit at a low level," GfK said in a statement.
Germans' shopping habits are key to the economy's performance as consumer spending accounts for over half of gross domestic product (GDP).
With exporters suffering from weak demand, the government wants to support domestic demand to cushion the economy from the impact of a global slowdown and has agreed stimulus measures it says are worth about 31 billion euros ($43.27 billion) .
"Germans don't want to let the financial crisis spoil their Christmas," said Sebastian Wanke, economist at Dekabank.
Many consumers were not yet feeling the effects of recession in Europe's largest economy, Wanke said, but added that household spending could suffer in coming months.
"If unemployment is rising at the beginning of the year and the bad news continue, consumer climate is also set to weaken significantly. Germany, the world's top exporter, will particularly feel the effect of the global downturn," he said.
The GfK indicator's willingness to buy component edged up to -6.3 for December from -6.7 for November. The component readings lag the headline number by a month.
German consumer price inflation slowed sharply in November to an annual rate of 1.4 percent from 2.4 percent in October.
Separate figures published on Monday showed German import prices were down 3.4 pct month-on-month in November and decreased 1.3 percent compared to a year ago, showing the biggest year-on-year decline since March 2004.
JOB WORRIES
The GfK figures showed a component on business cycle expectations fell to -32.4 from -30.1 in November. Another on income expectations fell sharply to -15.4 from -6.9 in November.
"The decline in the economy is leading growing numbers of those in employment to fear for their jobs and consequently to be more pessimistic in their assessment of their own financial position," GfK said.
The German economy slipped into recession over the summer, contracting in both the second and third quarters.
"One shouldn't interpret these figures too positively," LBBW economist Matthias Huth said of the consumer climate figures. "The propensity to buy is relatively modest and economic expectations are extremely negative."
"I would not expect large impulses to come from consumer spending in the coming year ... We're in a severe recession and next year will be very difficult," Huth said.
A deputy economy minister said last week the economy may shrink by more than 3 percent in 2009, and leading analysts have predicted a contraction of up to 4 percent -- which would be more than four times worse than the previous post-war nadir. (Writing by Paul Carrel and Kerstin Gehmlich, editing by Mike Peacock)