According to the confidence indicator from Statistics Finland, household confidence in the economy is still weak. The chief economist of the Central Chamber of Commerce notes that there are currently no signs that confidence will return to normal anytime soon. However, strong employment growth has supported households' purchasing power, but there is still little willingness to make expensive purchases.
In March, there was a small increase in household confidence, but overall sentiment remains bleak. The confidence indicator, which was released by Statistics Finland this morning, had a value of -10.8 in March. The corresponding figure in February was -11.9, which means that the trend is currently upward, but we are still far from normal. The long-term average of the confidence indicator is -2.2.
Nevertheless, consumer confidence is significantly better than the darkest estimates at the end of last year. In December, confidence reached an all-time low of -18.5.
"The economic news has been mostly better than feared lately, which has lifted households' expectations at the beginning of the year. However, the mood is contradictory in many ways. The war in Ukraine continues, the state is getting into debt in Finland, and inflation is still raging at high levels, so there are currently no conditions for household confidence to return to normal," says Jukka Appelqvist, chief economist of the Central Chamber of Commerce.
The willingness to buy homes, cars, and durable goods is very weak
Employment growth has been better than expected in the winter, which has supported households' combined purchasing power despite inflationary pressures.
"My own perceived threat of unemployment rose in March, but the situation is still fairly normal. The fear of unemployment is nowhere near the levels historically measured in the darkest economic cycles. Households seem to believe in a mild downturn in the labor market," says Appelqvist.
However, households do not have enough confidence that the overheated inflation situation will ease quickly. On average, consumer prices are expected to rise by 5.3 percent over the next year. At the same time, the willingness to buy homes, cars, and durable goods has remained very weak.
"We have survived the winter, and the worst fears of an energy crisis have not materialized. Right now, we have enough faith that we will avoid a direct catastrophe. However, the economic outlook is so uncertain that there is little willingness to make expensive purchases, and the prospects for private consumption remain weak," predicts Appelqvist.
The survey was conducted in the first half of March, so recent concerns about a possible banking crisis are not yet reflected in the results.
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