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11.6.2024 01:30

Consumer confidence stagnant, business confidence down, apart from industry

“Notwithstanding the growth of the economy, the fall in inflation and the increase in purchasing power, it feels like consumers have lost trust,” says Petri Malinen, an economist at Suomen Yrittäjät, the Finnish SME association.

The consumer confidence indicator, published by Statistics Finland, was -10.3 in May. In April, the indicator was -12.6, and -9.4 in March. Last May, the consumer confidence indicator was -8.8, and the long-term average is -2.5.

Consumers continue to view the current state of their finances dimly. Although consumers’ evaluation of their current situation has improved slightly, their expectations of the future of their personal finance has barely risen. They also continue to view the general employment situation negatively.

“Consumers seem to react surprisingly strongly to individual developments without realizing how exceptionally healthy employment is in general,” says Petri Malinen, an economist at Suomen Yrittäjät.

Consumers continue to consider it an extremely bad time to buy a house or flat. Purchasing intentions, frozen by high interest rates, have stagnated the housing market and reduced housing prices.

“No change to this can be expected before interest rates come down next month,” Malinen said on 27 May.

Consumption spending intentions continued to be low in May. The weak consumption demand has a direct impact on companies’ ability to hire additional staff, reducing job vacancies.

“Even though the unemployment figures are only up slightly, higher unemployment could become a longer-term phenomenon,” Malinen says.

Companies negative

Companies are not confident about the future. In May, businesses’ confidence decreased in all main sectors apart from industry, the Confidence Indicator from the Confederation of Business Industries shows.

“Confidence is significantly weaker than the long-term average. The latest figures indicate that this year is going to be more difficult than predicted. However, an interest-rate cut or a faster than predicted recovery of the Eurozone could turn the economic outlook and companies’ expectations in a better direction,” Malinen says.

The business confidence indicator for industry grew slightly in March to -13, but the sector continues to wallow well below zero.

“However, the slight increase in the indicator could provide small signals that business are gradually starting to make investments,” Malinen says.