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Published: 27 August 2008

Consumer confidence stopped weakening in August

The steady weakening of consumer confidence in the past months stopped in August. The consumer confidence indicator stood at 8.7 in August, whereas in July it was 6.5 and in June 10.2. However, when compared with one year ago and with the long-term average, confidence in the economy continued to be clearly weaker. The data are based on Statistics Finland's Consumer Survey, for which 1,485 people resident in Finland were interviewed between 1 and 19 August.

Of the four components of the consumer confidence indicator, only the expectations concerning consumers' own economic situation weakened slightly in August from the month before. These expectations were the weakest since the years 1995-1996. Consumers' expectations on Finland's economy and the development of unemployment remained bleak. However, consumers continued to regard their own financial situation and saving possibilities as excellent. August was not regarded a favourable time for making major purchases or for raising a loan, in particular. Consumers' predicted inflation rate was lower in August than in July.

Consumer views on the economic and financial conditions in Finland in August 2008, balances*

	Average 10/95-	Max. 10/95-	Min. 10/95-	August 2007	July 2008	August 2008	Situation**
Consumer confidence indicator (CCI)	13.8	21.8	3.5	20.3	6.5	8.7	- -
CCI components:
Own economic situation in 12 months' time	9.4	14.1	2.3	11.7	4.6	3.2	- -
Households' saving possibilities in the next 12 months	35.4	52.0	10.9	52.0	45.8	50.5	++
Finland's economic situation in 12 months time	4.9	21.7	-20.8	1.5	-20.8	-16.0	- -
Finland's unemployment situation in 12 months time	5.4	27.6	-22.7	16.1	-3.8	-2.9	-
Others:
Inflation in 12 months' time, per cent	2.1	4.6	0.7	2.8	4.5	3.9
Own threat of unemployment at present	4.4	7.6	0.8	7.2	6.6	3.0	-
Financial situation of household at present	26.3	35.1	14.7	34.0	32.9	31.9	++
Favourable time to make major purchases at present	20.5	37.7	-2.1	18.3	5.2	-1.9	- -
Favourable time to save at present	10.4	36.8	-19.6	35.1	30.3	29.0	++
Favourable time to raise a loan at present	19.7	42.0	-28.1	0.7	-28.1	-27.7	- -
* The balance figures are obtained by deducting the weighted proportion of negative answers from that of positive answers. The consumer confidence indicator is the average of the balance figures for the CCI components. The balance figures and the confidence indicator can range between -100 and 100 - the higher the balance figure the brighter the view on the economy. ** ++ Situation is very good, + Situation is good, - Situation is bad, - - Situation is very bad.

In August only 15 per cent of consumers believed that Finland's economic situation would improve in the coming twelve months, while 43 per cent of them thought that the country's economy would deteriorate. Twelve months earlier the corresponding proportions were 25 and 21 per cent. In all, 22 per cent of consumers believed in August that their own economy would improve and 17 per cent of them feared it would worsen over the year. One year ago the corresponding proportions were 31 and 11 per cent.

Altogether 28 per cent of consumers thought in August that unemployment would decrease over the year, while more consumers, or 32 per cent of them, believed it would increase. Twelve months earlier the corresponding proportions were 49 and 18 per cent. In August, 14 per cent of employed persons reckoned that their personal threat of unemployment had decreased over the past few months, but already nearly as many, or 13 per cent, thought it had grown.

Consumers predicted in August that consumer prices would go up by 3.9 per cent over the next 12 months. The corresponding figure for Finland was 4.5 per cent in July. The long-term predicted average inflation rate is 2.1 per cent.

As many as 73 per cent of consumers considered saving worthwhile in August. Sixty-six per cent of households had been able to lay aside some money and as many as 82 per cent believed they would be able to do so during the next 12 months. In August only 26 per cent of consumers regarded the time good for raising a loan. Twelve months ago the respective proportion was 50 per cent. However, as many households as one year previously, or 12 per cent, had plans in August to take out a loan within one year.

Only 34 per cent of consumers thought the time was favourable in August for buying durable goods. One month ago the respective proportion was 39 per cent and one year ago 44 per cent. Indeed, households' intentions to spend money were more moderate than before in August, although they still had plans to travel and purchase domestic appliances during the next six months. Sixteen per cent of households were fairly or very certain to buy a car and 8 per cent a dwelling during the next 12 months.

Consumer confidence indicator (CCI) 10/1995-8/2008

Consumers' micro and macro indicators 10/1995-8/2008*

* Micro indicator is the average of three balances: own economy and household's saving possibilities in 12 months' time, and
household's financial situation at present.
Macro indicator is the average of two balances: Finland's economy and unemployment in 12 months' time.

Deviation of CCI from country average in EU member states, July 2008*

* Calculated from seasonally adjusted series. Average: 10/1995-
Source: European Commission, DG ECFIN, Business and Consumer Survey Results, July 2008
http://ec.europa.eu/economy_finance/db_indicators/db_indicators8650_en.htm

Source: Consumer Survey 2008, August. Statistics Finland

Inquiries: Mr Pertti Kangassalo +358 9 1734 3598, kuluttaja.barometri@stat.fi

Director in charge: Mr Ari Tyrkkö

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Last updated 27.8.2008