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Published: 27 July 2006

Slight downturn in consumer confidence in July

Consumers' confidence in the economy weakened slightly in July. In July, the consumer confidence indicator stood at 14.4, having been 16.6 in June. However, confidence in the economy was still clearly stronger than during the corresponding time period of last year and also slightly above the long-term average. The data are based on Statistics Finland's Consumer Survey, for which 1,523 people resident in Finland were interviewed between 3 and 19 July.

In July, confidence declined from the previous month in all four components of the consumer confidence indicator. However, expectations concerning unemployment only weakened fractionally. In addition, consumers continued to view their saving possibilities as excellent and regarded purchasing of durable goods very worthwhile in July.

Consumer views on the economic and financial conditions in Finland in July 2006

	July 2006 balance figure	June 2006 balance figure	July 2005 balance figure	Average 10/95-7/06
Consumer confidence indicator (CCI)	14.4	16.6	10.3	13.5
CCI components:
Own economic situation in 12 months' time	9.1	12.4	11.6	9.3
Household's saving possibilities in the next 12 months	45.3	48.3	42.0	32.9
General economic situation in Finland in 12 months' time	0.2	2.3	-0.7	6.6
Unemployment in Finland in 12 months' time	3.1	3.4	-11.9	5.2
Others:
Inflation in 12 months' time, %	2.4	2.6	2.3	1.9
Personal threat of unemployment at present	4.7	3.7	2.7	..
Financial situation of household at present	30.8	29.8	33.3	25.1
Favourable time to make major purchases at present	29.0	22.6	31.3	20.9
Favourable time to save at present	22.3	23.5	12.6	6.4
Favourable time to raise a loan at present	24.8	23.1	36.7	23.2
The balance figures are obtained by deducting the weighted proportion of negative answers from that of positive answers. The consumer confidence indicator is the average of the balance figures for four questions concerning the next 12 months: own and Finland's economy, unemployment and household's saving possibilities. The balance figures and the confidence indicator can range between -100 and 100. A positive balance figure denotes an optimistic and a negative balance figure a pessimistic view on the economy.

In July, 23 per cent of consumers believed that Finland's economic situation would improve in the coming twelve months, while 22 per cent of them thought that the country's economy would deteriorate. One month earlier the corresponding proportions were 26 and 21 per cent. In all, 27 per cent of consumers believed in July that their own economy would improve and 10 per cent of them feared it would worsen over the year. In June, 31 per cent of consumers still expected their own economy to improve.

Altogether 30 per cent of consumers thought in July that unemployment would increase over the coming year, and 37 per cent of them believed it would decrease. Twelve months ago the respective proportions were gloomy: 43 and 22 per cent. Eleven per cent of employed persons reckoned in July that their personal threat of unemployment had grown over the past few months whereas 15 per cent thought it had lessened.

Consumers predicted in July that consumer prices would go up by 2.4 per cent over the next 12 months. In June, the respective predicted inflation rate was 2.6 per cent.

In July, 71 per cent of consumers thought the time was good for raising a loan and 13 per cent of households were planning to take out a loan in the next 12 months. Saving was considered worthwhile by 68 per cent of consumers in July. Sixty-five per cent of households had been able to lay aside some money and 78 per cent believed they would be able to do so during the next 12 months. Bank accounts and investment funds increased their popularity even further as households' investment targets.

In July, 50 per cent of consumers thought the time was favourable for buying durable goods. One month earlier the respective proportion was 44 per cent. Households had plenty of spending intentions on, for example, entertainment electronics, and hobby and sports equipment. Twenty-six per cent of households were thinking of buying a digital TV adapter within six months. In the next twelve months, 18 per cent of households were fairly or very certain to buy a car and 9 per cent a dwelling.

Consumer confidence indicator 10/1995-7/2006

Consumers' expectations concerning their own and Finland's economy in 12 months' time 10/1995-7/2006

Consumer confidence indicator in EU Member States, June 2006
Deviation of indicator from country average 10/1995-6/2006*

*Calculated from seasonally adjusted series. Data for France are indicative due to break in time series. Averages for a shorter time period: Malta 11/2002-, Luxembourg 1/2002-, Cyprus, Lithuania and Poland 1/2001-, Slovakia 4/1999-.
Source: European Commission, DG ECFIN, Business and Consumer Survey Results, June 2006
http://europa.eu.int/comm/economy_finance/indicators/businessandconsumersurveys_en.htm

Source: Consumer Survey 2006, July. Statistics Finland

Inquiries: Mr Pertti Kangassalo +358 9 1734 3598, kuluttaja.barometri@stat.fi

Director in charge: Mr Ari Tyrkkö

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Last updated 27.7.2006