Consumer confidence continues to decline in September

Consumer confidence fell slightly in September. Business confidence, by contrast, rose in retail but fell in industry.

“It seems the rise in the main VAT rate has spooked consumers, so spending intentions in September were weak,” says Petri Malinen, an economist at Suomen Yrittäjät, the Finnish SME association.

The consumer confidence indicator, reported by Statistics Finland, in September was -8.1. In August and July, the indicator was -7.2. Last September, the consumer confidence indicator was -11.5, and the long-term average is -2.6.

“Consumers’ views on the current state of their finances are glum and gradually worsening. At the same time, their expectations about the future of their finances are declining. When you add this to the consistently gloomy outlooks for unemployment in general, the result is unsurprising,” Malinen says.

Malinen also expects weak consumer demand to directly affect companies’ ability to hire staff, which will reduce the number of job vacancies, increasing the risk of higher unemployment for longer.

Boost in retail

In September, businesses’ confidence fell in industry, but recovered in the retail sector from a gloomy August. In construction and services, there was no change. Confidence is significantly weaker than the long-term average.

“The most recent figures seem to show that the end of the year will be very sluggish. The only relief comes from the brighter outlooks of SMEs. The most recent SME barometer shows that SMEs’ confidence in the future has significantly improved,” Malinen says.

Another sign of a glum autumn is the drop in the European Manufacturing Purchasing Managers’ Index, which was larger than forecast.

“In this situation, the Finnish economy isn’t going to get a fast boost from the Eurozone any time soon,” Malinen says.

In September, the industrial confidence indicator dropped to -12, three points lower than in August. The confidence indicator is well below the long-term average, which is 0.

The construction confidence indicator rose by one point in September to -36. The long-term average is -8.

In services, confidence remained unchanged from 0 in August. The long-term average is +11.

In retail, confidence rose from the previous month’s slump. The most recent confidence indicator is -9, up from -18 in August. The long-term average is -2.

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