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Fast Comment FinlandConsumer confidence weakened to a near-term low

  1. Consumer confidence fell in June - CCI index renewed in 5/2019
  2. Two new components in the CCI index
  3. Subdued private consumption reflects increased consumer pessimism
Consumer confidence fell in June - CCI index renewed in 5/2019
The Finnish consumer confidence indicator (CCI) stood at -4.6 in June, following a -1.8 reading in May. A year ago in June, the CCI was at 1.7. The latest confidence reading is clearly the weakest in a year. Statistics Finland made significant changes to the data content and calculation of the statistics on consumer confidence starting from the May 2019 survey. Changes to the CCI were made on the European Commission’s initiative and the new index is supposed to better anticipate the development of private consumption. With this renewed index, the historical data is available only from January 2018 onward.
Two new components in the CCI index
The new consumer confidence indicator consists of four components, which are the consumer’s own economy now (new component), the consumer’s own economy in 12 months, Finland’s economy in 12 months and the consumer’s spending money on major purchases in the next 12 months compared to the past 12 months (new component). Components that were removed are expectations concerning general unemployment and the household’s saving possibilities. Of the four components of the CCI, all other components weakened clearly in June compared to previous months except consumers’ intentions to spend money on durable goods, which remained more or less unchanged. Expectations concerning Finland’s economy in 12 months' time were particularly pessimistic. Compared to June 2018, all other components weakened except intentions to spend money on durable goods.
Subdued private consumption reflects increased consumer pessimism
With the new CCI index, the historical comparisons are obviously difficult to make. However, the fact that consumer sentiment has clearly weakened over the past year is consistent with the diminishing private consumption in the same period of time. In Q1 2019, private consumption actually decreased by 1.3 percent q-o-q and 0.4 percent y-o-y. Expectations for private consumption growth in Q2 remain muted as consumer sentiment waned again in June.

 



Disclaimer

Janne Ronkanen

Senior Economist

Finland

jaro06@handelsbanken.se

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