Tuesday, 27 November 2007

Finnish Consumer Confidence Plummeting

This statistics were released today by "statistics Finland" describing the low consumer confidence that has been falling since summer 2007.

"Consumers' confidence in the economy weakened in November."

"Of the four components of the consumer confidence indicator, expectations concerning Finland's economy and development of unemployment weakened in November from the previous month."

"Consumers regarded saving especially worthwhile in November, in contrast to their views on raising a loan or purchasing durable goods. Consumers expected inflation to accelerate in the coming months"

I would like to highlight the weakness of "raising a loan" component which after all is the pillar of the housing market stability. It has been falling in the past few months and is approaching an all time low. My guess is that this will continue to deteriorate at least for another 6 to 12 months, something not seen since 1995.

"In November, eight per cent of households were thinking about purchasing a dwelling within a year."
If I decrypt that I would say that 92% of household don't think they will buy a dwelling in the next 12 month ... I think it's pretty wise considering rising uncertainties in the interest rates and economical fronts.

"Saving was considered worthwhile by a record 81 per cent of consumers in November."
People start to be cautious, not good for an economy that is based and fuelled by spending and consumer debt...


Anonymous said...

The press release on this from STT also adds: "The long-term average of the indicator is +13.9 points."

So while more negative than recently, the Finnish Consumer is still more positive than she normally is.

The question is will her confidence continue to drop further and how will this affect her spending?

My guess is that the confidence level will continue to drop.


HousingFinland said...

What you have to look is the trend and it is declining. The question is : is it a temporary decline or a sustained one?
Let's hope that it is just a temporary one as experienced in the past years.

In general it's wiser to look ahead instead of looking in the "rear mirror"...

The confidence will deteriorate further if the housing downturn will start to show up in Europe or the economy start to slow ... and it's likely in 2008.