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Consumers’ confidence weak, business owners more optimistic
Business owners’ optimism is a very good sign, an economist at Suomen Yrittäjät, the Finnish SME association, says.
Consumers’ confidence improved slightly in March, but remained at a weak level. The confidence indicator, published by Statistics Finland, was -8.2 in March. In February, the indicator was -9.0, and in January -8.4. In March last year, the confidence indicator was -9.4, while the long-term average is -2.6.
“Consumers’ weak confidence continues to slow down a positive turn in the Finnish economy,” says Roope Ohlsbom, an economist at Suomen Yrittäjät.
Consumers’ views of the current state of their personal finances improved slightly but nevertheless remained very weak. Consumers also considered themselves at high risk of unemployment personally.
“In particular, consumers’ high concerns about price increases are surprising, as inflation in Finland has remained low for a long time.
They continued to consider the time extremely unfavourable for spending money and buying consumer durables.
“Consumer confidence has a crucial impact on the economy, as household consumption accounts for around half of Finland’s GDP,” Ohlsbom says.
Business owners were one of the significantly more optimistic population groups, giving a confidence indicator of 3.1.
“Business owners’ optimism is an extremely good sign for the Finnish economy, as it is often an indicator of increased economic activity. Business owners have an astute and real-time feeling of what is actually happening in the market. Economic statistics and other population groups’ confidence follows business owners views with some delay,” Ohlsbom says.
Business confidence rising
In addition to Finnish business owners, companies’ economic confidence has increased more than consumers’ confidence has. In March, companies’ confidence increased in industry, services and retail, the business confidence indicator published by the Confederation of Finnish Industries shows.
In the construction sector confidence declined, with the situation in the sector still extremely difficult. Overall, however, businesses’ confidence is significantly weaker than the long-term average.
“The most recent figures indicate that businesses are optimistic, but anticipatory,” Ohlsbom says.
In particular, small businesses are optimistic. In addition to business owners’ positive consumer confidence, the spring SME barometer revealed that an equal number of SMEs predicted the economy would strengthen and weaken.
“The direction of the economy depends strongly on factors such as a perk in private consumption and the turns in the trade war initiated by Donald Trump, the unpredictable course of which companies are monitoring closely.”
“The unity of the EU and the importance of negotiations it’s conducting have become more crucial as the spring has progressed. If the negotiations are unsuccessful, Finland’s exports to the US and the outlooks for industry, in particular, could become significantly worse,” Ohlsbom says.
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