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Economy in Brief

Euro-Consumer Confidence Hits the Skids
by Robert Brusca November 30, 2007

Consumer confidence is taking a hit and an ongoing one in EMU. The percentiles tell an interesting story of these unfolding developments. It is no surprise (final column of the table) that the strongest correlation with Consumer Confidence is expected unemployment. Expected unemployment is rising but is only in its 15th percentile. Expected savings is also a very weak percentile reading as is ‘major purchases now’. The later figure is plotted in the chart along with the consumer confidence main index. ‘Major purchases now’ responses seem to lead the overall index -- and this series is very weak.

The strongest range readings are for price trends (past 12 months and future 12 months) and for the ‘economic situation past 12 months’. In other words the more topical the categories, the weaker the responses.

Across countries Germany’s responses are still quite strong in the top 17 percent of its range. The UK in the 68th percentile is next followed by France in the 60th percentile. Italy and Spain are weak with readings below the 50th percentile.

It should not be a surprise that (apart from the UK) all these countries are in the same currency union and are experiencing the same pains of a strong currency. Germany, a county used to a strong currency, finds its consumers faring best. Italy and Spain, two previously weak currency countries, are having a much more difficult time making the adjustment to the strong euro.

EMU Consumer Confidence and Country Performance
EMU Nov
07
Oct
07
Sep
07
Aug
07
%tile Rank Max Min Range Mean R-SQ
w/
Confid
Consumer Confidence -8 -6 -6 -4 67.7 67 2 -29 31 -12 --
Fin Situation Next 12 -4 -3 -3 -2 43.8 128 5 -11 16 -2 0.85
Econ Sit Next 12 -11 -6 -7 -2 61.5 90 4 -35 39 -12 0.91
Unemployment Expect 7 5 6 3 15.9 183 60 -3 63 26 0.94
Savings Next 12m -11 -10 -7 -7 17.6 186 3 -14 17 -6 0.55
Fin Sit Past12m -13 -12 -10 -10 36.8 121 -1 -20 19 -11 0.53
Econ Sit Past 12m -17 -14 -13 -9 69.6 54 -3 -49 46 -24 0.87
Savings-Now 30 31 33 32 33.3 79 46 22 24 35 0.03
Major Purchase-Now -23 -18 -16 -15 17.6 101 5 -29 34 -12 0.54
Major Purchase Next 12m -18 -16 -17 -17 33.3 92 -12 -21 9 -16 0.43
Price trends past 12m 55 50 45 41 88.1 9 63 -4 67 31 0.10
Price Trends Next 12m 28 26 28 26 76.5 14 36 2 34 17 0.02
By Country
Germany 3 4 3 6 83.8 16 9 -28 37 -10 0.82
France -11 -7 -5 -3 60.5 50 4 -34 38 -17 0.78
Italy -22 -21 -19 -20 40.0 189 2 -38 40 -14 0.53
Spain -17 -16 -14 -12 46.5 174 6 -37 43 -11 0.64
UK -4 -2 -3 -2 68.6 75 7 -28 35 -7 0.21
Since 1990 208 -Count
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