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Published: 27 October 2008

Consumer confidence negative in October

Consumers' confidence in the economy weakened clearly in October. The consumer confidence indicator stood at -0.2 in October, having been 8.1 in September and 8.7 in August. Confidence in the economy was also clearly weaker when compared with one year ago and with the long-term average. The data are based on Statistics Finland's Consumer Survey, for which 1,538 people resident in Finland were interviewed between 1 and 17 October.

Consumers' confidence in all four components of the consumer confidence indicator weakened in October from the previous month and year. Consumers' expectations concerning Finland's economy and the development of unemployment were the gloomiest since the beginning of the 1990s. By contrast, consumers still expressed some optimism in respect of their own economic situation and continued to asses their own financial situation and saving possibilities as good. In October consumers did not consider the time at all favourable for making major purchases or raising a loan, and their plans for doing so decreased. Correspondingly, saving was considered especially worthwhile. Consumers predicted a roughly similar inflation rate for the next 12 months in October as in September.

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

	Average 10/95-	Max. 10/95-	Min. 10/95-	October 2007	September 2008	October 2008	Situation**
Consumer confidence indicator (CCI)	13.6	21.8	-0.2	17.3	8.1	-0.2	- -
CCI components:
Own economic situation in 12 months' time	9.4	14.1	2.3	12.1	6.3	5.3	- -
Households' saving possibilities in the next 12 months	35.5	52.0	10.9	46.6	50.7	40.2	+
Finland's economic situation in 12 months time	4.6	21.7	-21.0	-4.1	-16.8	-21.0	- -
Finland's unemployment situation in 12 months time	5.1	27.6	-25.2	14.4	-8.0	-25.2	- -
Others:
Inflation in 12 months' time, per cent	2.1	4.6	0.7	3.3	3.5	3.6
Own threat of unemployment at present	4.3	7.6	-1.0	5.4	2.3	-1.0	- -
Financial situation of household at present	26.4	35.1	14.7	31.6	34.1	29.7	+
Favourable time to make major purchases at present	20.1	37.7	-14.2	10.9	-2.7	-14.2	- -
Favourable time to save at present	10.7	36.8	-19.6	35.4	30.5	31.0	++
Favourable time to raise a loan at present	19.0	42.0	-47.1	-3.3	-25.7	-47.1	- -
* 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. Deviation of balance from average has been compared to standard deviation.

Only 15 per cent of consumers believed in October that Finland's economic situation would improve in the coming twelve months, while as many as 52 per cent of them thought that the country's economy would deteriorate. Twelve months earlier the corresponding proportions were 21 and 28 per cent. In October, 24 per cent of consumers believed that their own economy would improve and 15 per cent of them feared it would worsen over the year. One year ago the corresponding proportions were 31 and 11 per cent.

In October only 12 per cent of consumers thought that unemployment would decrease over the year, while many more consumers, or 57 per cent of them, believed it would increase. The corresponding proportions were 25 and 39 per cent in September and optimistic 47 and 18 per cent one year ago. In October 10 per cent of employed persons reckoned that their personal threat of unemployment had decreased over the past few months, but already more, or 15 per cent of them, thought it had grown. Forty-seven per cent of employed persons thought the threat had remained unchanged and 27 per cent felt that they were not threatened by unemployment at all.

Consumers predicted in October that consumer prices would go up by 3.6 per cent over the next 12 months. As recently as in June the respective figure was still 4.6 per cent. The long-term predicted average inflation rate is 2.1 per cent.

As many as 74 per cent of consumers considered saving worthwhile in October. Sixty-two per cent of households had been able to lay aside some money and 75 per cent believed they would be able to do so during the next 12 months. Households mostly save for a rainy day. After the most popular fixed-term or investment accounts, the most common investment targets were investment funds and insurances, whose popularity, however, decreased slightly in October.

Only 13 per cent of consumers regarded the time good for raising a loan in October. One month ago the respective proportion was 27 per cent and one year ago 46 per cent. At the same time plans for taking out a loan had decreased somewhat, as in October only 9 per cent of households were planning to raise a loan in the next twelve months. In September the respective proportion was 12 per cent and one year ago 13 per cent.

Only 30 per cent of consumers thought in October that the time was favourable for making major purchases. One month ago the respective proportion was 34 per cent and in October 2006 it stood at 40 per cent. Indeed, in October households' intentions to spend money were the most moderate in a long time, although many households still had, for instance, plans to travel abroad during the next six months. Plans to make the most major kinds of purchases also decreased slightly in October, as 15 per cent of households were fairly or very certain to buy a car and 7 per cent a dwelling in the next twelve months.

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

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

* 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, September 2008*

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

Source: Consumer Survey 2008, October. 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 27.10.2008