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Published: 28 July 2008

Consumer confidence at low ebb

Consumers' confidence in the economy continued to weaken in July. The consumer confidence indicator stood at 6.5 in July, while it was 10.2 in June and 11.1 in May. When compared with one year ago and with the long-term average, confidence in the economy was clearly weaker. The data are based on Statistics Finland's Consumer Survey, for which 1,460 people resident in Finland were interviewed between 1 and 18 July.

Consumers' confidence in all four components of the consumer confidence indicator weakened from the previous month in July. Consumers' expectations concerning Finland's economy were the gloomiest since the year 1990. Views on the development of unemployment also darkened in July. Consumers' expectations about their own economic situation, too, were the most cautious since 1996. Nevertheless, consumers continued to regard their own employment prospects and saving possibilities as good. July was not regarded a favourable time for making major purchases or for raising a loan, in particular. In addition, inflation was predicted to continue at its fast rate.

Consumer views on the economic and financial conditions in Finland in July 2008, balances*

	Average 10/95-	Max. 10/95-	Min. 10/95-	July 2007	June 2008	July 2008	Situation**
Consumer confidence indicator (CCI)	13.8	21.8	3.5	18.5	10.2	6.5	- -
CCI components:
Own economic situation in 12 months' time	9.5	14.1	2.3	11.4	5.8	4.6	- -
Households' saving possibilities in the next 12 months	35.3	52.0	10.9	45.1	46.9	45.8	+
Finland's economic situation in 12 months time	5.0	21.7	-20.8	2.6	-17.0	-20.8	- -
Finland's unemployment situation in 12 months time	5.5	27.6	-22.7	14.8	5.0	-3.8	-
Others:
Inflation in 12 months' time, per cent	2.1	4.6	0.7	2.6	4.6	4.5
Own threat of unemployment at present	4.5	7.6	0.8	6.1	6.4	6.6	++
Financial situation of household at present	26.3	35.1	14.7	32.5	31.1	32.9	++
Favourable time to make major purchases at present	20.6	37.7	-2.1	22.3	2.9	5.2	- -
Favourable time to save at present	10.3	36.8	-19.6	33.7	29.7	30.3	++
Favourable time to raise a loan at present	20.0	42.0	-28.1	3.7	-20.8	-28.1	- -
* 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 the CCI components. The balance figures and the confidence indicator can range between -100 and 100 - the higher the balance figure the brighter the view on the economy. ** ++ Situation is very good, + Situation is good, - Situation is bad, - - Situation is very bad.

In July only 12 per cent of consumers believed that Finland's economic situation would improve in the coming twelve months, while as many as 49 per cent of them thought that the country's economy would deteriorate. Twelve months earlier the corresponding proportions were 25 and 19 per cent. In all, 25 per cent of consumers believed in July that their own economy would improve while 17 per cent of them feared it would worsen over the year. One year ago the corresponding proportions were 30 and 11 per cent.

Altogether 26 per cent of consumers thought in July that unemployment would decrease over the year, while more consumers, or 33 per cent of them, believed it would increase. The corresponding proportions were 35 and 24 per cent in June and 48 and 19 per cent one year ago. However, sixteen per cent of employed persons reckoned in July that their personal threat of unemployment had lessened over the past few months, while only 10 per cent thought it had grown.

Consumers predicted in July that consumer prices would go up by 4.5 per cent over the next 12 months. The long-term predicted average inflation rate is 2.1 per cent.

Saving was considered worthwhile by 75 per cent of consumers in July. Sixty-six per cent of households had been able to lay aside some money and 79 per cent believed they would be able to do so during the next 12 months. Households mostly save for a rainy day. After the popular fixed-term or investment accounts, the most common investment targets were investment funds and insurances.

In July, only 26 per cent of consumers - the smallest proportion since the year 1993 - still regarded the time good for raising a loan. Twelve months ago the respective proportion was 53 per cent. Slightly fewer households than before, or 10 per cent of them, were planning in July to raise a loan within one year.

In July, 39 per cent of consumers thought the time was favourable for buying durable goods. One year previously the corresponding proportion was 47 per cent. Indeed, households' intentions to spend money were more moderate than before in July, but they still had plans to travel, renovate their dwellings and purchase hobby equipment during the next six months. Sixteen per cent of households were fairly or very certain to buy a car and 7 per cent a dwelling during the next 12 months.

Consumer confidence indicator (CCI) 10/1995-7/2008

Consumers' micro and macro indicators 10/1995-7/2008*

* Micro indicator is the average of three balances: own economy and household's saving possibilities in 12 months' time, and
household's financial situation at present.
Macro indicator is the average of two balances: Finland's economy and unemployment in 12 months' time.

Deviation of CCI from country average in EU member states, June 2008*

* Calculated from seasonally adjusted series. Average: 10/1995-
Source: European Commission, DG ECFIN, Business and Consumer Survey Results, June 2008
http://ec.europa.eu/economy_finance/db_indicators/db_indicators8650_en.htm

Source: Consumer Survey 2008, 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 28.7.2008