Thursday, April 20, 2023 4:54 PM EDT
The consumer confidence index increased to -17.5 in April from -19.1 in March. While this level is historically associated with falling household consumption, the upward movement does suggest there's light at the end of the tunnel for consumer purchasing power.
Consumer confidence dropped to record lows last year as the war in Ukraine weighed on sentiment and on consumer wallets as inflation soared. Nevertheless, this initially did not lead to contracting consumption as the post-pandemic reopening caused catch-up spending – mainly on services – among eurozone consumers.
In the fourth quarter, however, we saw a record contraction in household consumption (excluding pandemic periods of lockdowns), which was not just due to lower energy consumption, but also due to the falling consumption of semi-durable goods and services. This came on the back of slightly recovering consumer confidence. Signs of confidence in consumption have therefore been muddied by post-pandemic activity.
In recent months, we’ve seen wages improve while inflation has cautiously started to come down. We’re getting closer to the point where eurozone wage growth outpaces inflation again, but for now we continue to deal with purchasing power losses. On the bright side, the labour market has continued to see record-low unemployment levels, which provides a solid base for continued consumption. Together, this creates an environment of modest consumption growth over the course of 2023.
More By This Author:
FX Daily: A Glimpse Of Future Easing
Looking Past The Peak Of Fed Key Rates
FX Daily: Time For Some Stabilization?
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
more
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.
less
How did you like this article? Let us know so we can better customize your reading experience.
