Consumer confidence in economy falling, business confidence rising

Statistics Finland’s confidence indicator was -7.6, compared to –6.4 in July and the long-term average of -2.7.

“It’s bad that the confidence indicator results are weakening, but from the perspective of economic growth and consumption, what is positive is that consumers’ confidence in their finance improved slightly,” says Petri Malinen, Senior Economist at Suomen Yrittäjät, the Finnish SME association.

“Consumers’ assessment of their current financial situation improved for the third month in a row. It seems that in spite of the cool August weather, the sun is beginning to gradually shine for consumers. This is a good basis to build on,” Malinen says.

However, consumers’ reduced confidence in Finland’s economy presents difficulties.

“Expectations of how Finland’s economy will perform have simply collapsed. The upcoming budgetary talks with possible additional cuts are unlikely to improve this perception. Many consumers think the situation is one in which it’s better to prepare for weaker times,” Malinen says.

Consumers’ expectations about the unemployment numbers continued to be pessimistic.

“The difficult job market is also partly reflected in consumers’ purchasing intentions, which are low. However, a small positive addition to the situation is that consumers’ borrowing intentions are significantly stronger than in August. This could indicate that consumers could be going shopping this autumn,” Malinen says.

Business confidence rising

Finnish companies’ economic outlook is gradually recovering, and output is expected to grow in the next few months, the business confidence indicator published by the Confederation of Finnish Industries shows.

“It would appear that the end of the EU–US trade talks and the removal of months of gnawing uncertainty increased confidence in the future,” Malinen says.

The confidence of all main sectors increased. The confidence of the construction sector increased significantly, but was still low. The new indicator was -27, up from July’s -37. Confidence is significantly weaker (-9) than the long-term average.

“On the whole, businesses’ confidence indicates slight economic growth. Even though there was no big growth injection in the summer, in terms of economic growth many factors are in a reasonably good position. However, the challenge is that without confidence in the future, businesses will not invest, nor will households consume, meaning the trend could continue to be sluggish,” Malinen says.

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