EU Consumer Confidence at Highest Level in Over Nine Years

Consumer sentiment within the EU 28 has continued its upward trend in the third quarter of this year, finishing on 20.9 points, according to GfK. This is up from 19.1 points at the end of Q2 and now stands at a level not seen since the end of 2007.

Rolf Bürkl, GfK’s consumer expert, comments, "Private consumption has proved a major pillar for the EU economy during the last quarter with several countries either improving or holding steady on the ‘propensity to buy’ measure. This has combated the more mixed results seen in individual countries within the other measures, where economic expectation has dropped in France, Germany and Portugal, and income expectation has fallen in France, Austria and Germany, compared to the second quarter of 2017.

Despite excellent domestic conditions for high consumer sentiment, based on low unemployment rate and positive income growth, Germany’s consumer sentiment has shown some turbulence in the last quarter. Having climbed steadily since February, the economic expectation in Germany dropped suddenly in mid-quarter of Q3, before climbing back to finish on 33.4 points at the end of September.

Income expectation in Germany started Q3 with a small increase, but dropped sharply in September to end at 52.7 points. Propensity to buy as remained fairly steady in Q3, continuing to hold at a historically high level and finishing the quarter on 57.0 points.

Sharp falls in economic and income expectation After the positive “Macron effect“ seen in Q1 and Q2, France has suffered falls across all three measures during Q3. This comes amidst a background of continuing high unemployment rate, which is double that of other big European economies, such as Germany, and strong media focus on Macron’s planned labor market reforms.

Economic expectation dropped throughout the quarter, ending on 30.2 points at the end of September. Income expectations dropped sharply at the start of Q3, before rising slightly and then dropping again during September to end on -18.9 points, a low not seen since April 2016. After a level start, propensity to buy dropped slightly during the end of the quarter to finish on 22.7 points.

Despite continued uncertainty over the outcome of Brexit negotiations, Great Britain’s situation has held fairly steady in the last quarter and even shows a gentle increase in income expectation. Economic expectation in Great Britain dropped mid-way through Q3 before rising slightly to finish on -23.5 points. Income expectation rose comfortably in the first two months of Q3 before tailing off slightly in September. Propensity to buy saw increases at the start and end of the quarter, balanced by a dip mid-quarter, to end on -3.5 points.

Italy has seen signs of improvement in consumer confidence during Q3, even as the Italian economy continues to battle with high youth unemployment and the financial burden of high numbers of refugees from Northern Africa Economic expectation has shown a steady improvement over the quarter, with September in particular showing a strong improvement.

The quarter ended at -27.6 points, which is its best level since May 2016. Income expectation rose steadily in both July and August, before tailing off slightly during September, to finish on -8.2 points. Propensity to buy continued the upward turn seen last quarter to end September on 16.1 points.

Despite continued high unemployment levels, consumer economic sentiment in Spain has remain steady and even improved in the area of propensity to buy. This is possibly due to improvements in tourism levels. However, recent political violence around the Catalonian polls may well show repercussions in Q4.