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Fast Comment FinlandFinnish consumers remained moody in July

  1. Consumer confidence stabilised but the level is alarmingly low
  2. Assessment of Finland's economy and the labour market has darkened
  3. Consumers may be signaling a turning point
Consumer confidence stabilised but the level is alarmingly low
The consumer confidence indicator (CCI) stood at -3.9 in July, having been -4.6 in June and -1.8 in May. Last year in July, the CCI received the value 2.5 and the average for the CCI since January 2018 is 0.3.
Assessment of Finland's economy and the labour market has darkened
Of the four components of the CCI, only expectations concerning Finland's economy weakened in July from June. The other components improved slightly. Expectations concerning Finland’s economy were very pessimistic. At the same time, views on consumers’ own economic situation now and in the future were subdued. Intentions to spend money on durable goods were clearly higher than average in July. Compared with the corresponding period last year, all the components of the CCI apart from spending weakened. Especially expectations concerning Finland's economy plummeted over the year. In July, consumers expected the general employment situation to darken in the near future. Employed consumers also felt that their personal threat of unemployment has increased in recent times. On the other hand, every second employed person did not experience any threat. In July, consumers considered their own financial situation to be good. The time was, in general, regarded favourable for raising a loan and, with some reservations, also for buying durable goods and saving.
Consumers may be signaling a turning point
It is clear that the level of confidence is low, and consumer’s may be anticipating much weaker labour market development, which is not entirely unwarranted. In fact, employment growth has deteriorated quite rapidly during April-June this year, as in March the number of employed persons still increased by 2.5 percent y-o-y but by June this growth was completely exhausted. Furthermore overall GDP growth has moderated markedly since the beginning of 2018, and the monthly GDP indicator posted economic activity growth of only 0.6 percent y-o-y in May. Employment growth historically lags overall economic growth, and often consumer’s expectations of nation’s growth turn ahead of actual GDP growth.


 




Disclaimer

Tiina Helenius

Chief Economist Finland

Finland and Emerging Asia

tihe01@handelsbanken.se

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