Consumers’ economic confidence sank to the weakest since last spring

Consumers confidence fell in December to its weakest level since last spring, tells Statistics Finland. The consumer confidence indicator got a value of -8.6 in December, while the long-term average is -2.6.

The time was still considered very unfavorable for buying durable goods.

“Private consumption has been hoped to stimulate the Finnish economy, but based on the confidence indicator, the situation looks weak. In December, there were even fewer intentions to use money for consumption,” says the chief actuary Pertti Kangassalo Statistics Finland on the website.

As many as 60 percent of consumers estimate that unemployment will increase over the next year. Only 15 percent of consumers believe that unemployment will decrease.

More than ever now also see unemployment as a personal threat.

“In December, almost a third of consumers estimate that the risk of unemployment has increased for them,” says Kangassalo.

Consumers in my opinion, December was still a very bad time to take out a loan. Only 11 percent of consumers said they would consider buying a home within the next year. Likewise, only 11 percent planned to either definitely or possibly buy a car within a year.

Instead of spending, money is now put into savings. 41 percent of consumers considered the time to be favorable for saving.

Chief Economist of Municipal Finance Timo Vesala states that in terms of economic recovery, consumers’ spending intentions are developing in the wrong direction.

“The threat of unemployment is the worst stone in the shoe”, Vesala sums up the message service in X.

Consumers the estimate of inflation at the time of the survey was quite high. Consumers estimate that prices would have risen by 5.3 percent since December of the previous year. However, annual inflation measured by Statistics Finland was exactly one percent in November.

“In real terms, inflation has slowed down, and interest rates have fallen, so purchasing power has improved. However, consumers’ picture of the situation is different. The money should probably be used already, but now we’d rather put it in savings,” says Kangassalo.

In December, 1,270 people living in Finland responded to Statistics Finland’s consumer confidence survey.

Companies trust as a whole weakened a little in December, but there was a large dispersion between industries, says Elinkeinoelämän centralsliitto (EK).

In retail trade, confidence pushed to its highest level since the beginning of 2022. The retail trade confidence indicator got the value +1 in December, while it was -7 the previous month.

In construction, the strengthening of confidence in recent months was cut off in a harsh way. The balance figure describing confidence deteriorated rapidly and was -35.

Confidence in industry and services weakened slightly from the previous month.

“Business cycle estimates are generally on the weaker side of the long-term average. However, a clear drop in the interest rate supports purchasing power and therefore retail trade in particular,” says EK’s chief economist Pen Screams in the bulletin.