Global| Oct 31 2003Business Confidence Improves in Europe, but Consumers Remain Wary
Summary
Earlier this week, we described improving business confidence in several European countries, especially Germany and the Netherlands. Indeed, this trend seems to prevail in much of Europe, as the EC's gauge of the "business climate" [...]
Earlier this week, we described improving business confidence in several European countries, especially Germany and the Netherlands. Indeed, this trend seems to prevail in much of Europe, as the EC's gauge of the "business climate" for October sees its best reading since May 2001. Again, the "improvement" is relative, as the indicator remains negative, but considerably less than anytime in the last two years. Even so, every major sector of business participated in the October move. Confidence gained outright in services, to +9 from +7 in September. The other divisions all showed smaller negative values, with industry up to -8 from -9. retailing to -10 from -12 and construction to -21 from -23.
At the same time, consumer confidence looks to have stalled out. That measure fell steeply from last October through March, bottoming out at -21; it has struggled to pull up since then. For the last three months, it has been stuck at -17, which apart from the first seven months this year, is itself the worst reading since several months at -18 in 1996. The recent flat pattern results from a mildly favorable trend in people's expectations for the overall economic situation and unemployment, offset by modest deteriorations in their general financial condition and their outlook for savings.
Perhaps a link between these mixed results for business and consumer confidence can be found in similarly mixed readings for employment prospects among businesses. Retailing executives said their expectations for employment sagged in October back to -4 from an improved -1 in September. Construction looked to be a bit better, climbing to -14 from -16. Finally service industries saw current employment conditions fall to 0 from +2 and prospects drop to -7 from -3. These lackluster assessments of the job market from those doing the hiring support consumers' skepticism about their own financial condition, even as they look for unemployment to become a less severe drag.
| Euro-Zone Confidence Indicators | Oct 2003 | Sept 2003 | Oct 2002 | 2002 | 2001 | 2000 |
|---|---|---|---|---|---|---|
| Euro-Zone Business Climate | -0.18 | -0.42 | -0.32 | -0.50 | -0.17 | +1.37 |
| Euro-Zone Consumer Confidence (% Balance) | -17 | -17 | -12 | -11 | -5 | 1 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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