Economy in Brief: 2022

After peaking late in 2021, confidence on the part of Finland's consumers has continued to move lower over 12 months. The confidence indicator averages -2.9 points over 12 months, it averages -8.2 points over six months, it averages -12.5 points over three months, and in June, it logs a reading of -14.3 points. This is a new historic low reading. Consumer attitudes obviously are being greatly affected by the war that is going on in Ukraine and by the potential for that war to spread because of Russia's aggressive posture and threats.

The June reading of -14.3 is the weakest reading for that index on data back to July 1999. For the economy, the current assessment is a reading of -43.2; it has a low 8.7 percentile standing, another very weak reading. The rating for the economy in 12-months has a June value of -30.4 and a percentile standing in the 1.4 percentile mark near the bottom of its historic queue of values.

Garnering a strong response is the reaction to consumer price inflation for 12 months ahead, which is at a 6.3 reading in June compared to a 5.9 response in May. That resonates as a 99.6 percentile standing in its historic queue of data. On data back to 1995, there has not been a stronger response for expected inflation.

Unemployment in Finland in 12 months registers a -8.5 compared to -8.1 in May. It is slightly higher, compared to April's -11.2 value and it marks a 59.1 percentile standing for the response. Clearly there are concerns about unemployment, but for the moment these concerns aren't as pressing as more general concerns about the economy and inflation. The individuals' personalized threat of unemployment this month rose slightly, moving to -2.3 from -2.6 and has a historic standing in its 60.5 percentile which is very close to the 59.1 percentile standing for the overall economy. At this time, Finish people don't seem to see any greater or lesser personal risk of unemployment than they see for the economy at large.

Assessments of the environment cluster around weak values. The favorability of the time to purchase durables has been slipping steadily; it fell to a -20.7 mark in June from -14.8 in May that had been -8.8 in April. That slippage has been steady and quite dramatic drop; it brings the reading to its lowest ranking in the history of the report.

The favorability at this time for saving also has slipped to -6.9 in June from -1.1 in May and +3.5 in April. This June response has a 3.6 percentile standing, a very weak standing for the favorability of the ‘time for savings.' It's not a good time to purchase durables and it's not a good time to save.

The favorability of this period for raising a loan balance has also slipped; it fell to -34.2 in June from a reading of -28.5 in May that was at roughly the same level in April. The June value has a 2.2 percentile standing in the historic queue of data on this response. Consumers clearly don't see this as a good time for raising a loan balance and increasing debt, or for saving or for buying durable goods.

However, on the matter of household financial situation, the assessment readings have eroded only slightly over the last three months. At 27.6 in June, the rating is only marginally weaker than 29.5 back in April and it still has an 83.3 percentile standing overall. Households' current financial situation is still quite good by historic standards, in the top 20 percentile of the various assessments that Finns have given it. They are concerned about the future and concerned about executing transactions in this economy even though they have solid current financial situations.

The prospects for savings over the next 12 months show some slight erosion; the June value is 45 and that compares to an April value of 49.7. Its percentile queue standing is at its 47.5 percentile which is below its 50th percentile, marking it as a below median response. However, it's not below the median by very much and that marks the possibilities for savings to be not too different from the historic median and characterizable as ‘normal.'

Italy's consumer confidence fell month-to-month. Consumer confidence is down 12.5% over three months and down by 14.6% over 12 months. The mean for consumer confidence in Italy is at a value of 102 so that its level of 98.3 is well below its mean. The percentile ranking of the June reading is at 28.2% which means that it has been lower than this 28.2% of the time and since the median occurs at a 50% reading, it means it is significantly below its median as well as the mean.

Month-to-month the overall situation has fallen off sharply. Evaluated over the past 12 months compared to where it stood last month, the reading is at -112 compared to -78 last month. However, the overall situation for the 12 months ahead improved slightly with a -15 reading where the May reading is -17. The mean reading for this category is at -2 making its -15 reading (although better than it was in March 2022) quite weak and well below its mean. Unemployment expectations have fallen back to reading of 5 in June from 6 in May and from 13 in March. Household budget considerations have eroded to a mark of 16 in June down from 19 in May and that compares to 18 in March.

The household financial situation over the last 12 months is now assessed as worse than it was back in May; the June -42 assessment is below the -36 in May and also below the -32 for back in March. The next 12-month outlook has -26 assessment in June, worse than May's -24 although not as bad as the March reading of -34.

The environment for savings has improved a bit month-to-month with a reading of 66 in June compared to 64 in May. Future savings are unchanged at -12 compared to -12 last month and compared well to a -10 reading it back in March.

The business index rose to 110 in June from 109.4 in May; it's only slightly below its March 2022 value which was 110.2. Over three months the business index is lower by 0.2%; over 12 months it's lower by 2.9%.

That percentile standing for the overall situation is at 19% in the lowest 1/5 of its range for the assessment of the overall situation in the last 12 months; for the next 12 months the overall situation is assessed at a 23.9 percentile standing- better but not by much. Unemployment is at a very high 70.8 percentile standing. Clearly there are concerns of higher unemployment. The household budget has a 64.6 percentile standing, more or less a midstream position. The financial situation over the last 12 months has a 35.4% outstanding, a week result but much stronger than the assessment for the next 12 months which is at 5.6 percentile. Household savings currently are considered easy to have at a 92.8 percentile standing and only slightly harder to come by in the future at an 85.2% standing. The environment to make major purchases is at a weak 29.8% standing, in the lower 1/3 of its range. Quite apart from consumer responses, the business index has an 82.3 percentile standing; businesses are not feeling or fearing anywhere near the pressure or concerns about the current environment compared to consumers- that's quite a split.

The S&P Global PMI indexes weakened across the board in June; the exception to the weakening was only in Japan where services have improved month-to-month and where the composite also improved month-to-month. The U.K., France, Germany, the U.S., and the European Monetary Union each saw weaker services, manufacturing, and composite readings. This is a sharp worsening from May when the composite index weakened in the U.S., and in the U.K. with the U.K. seeing weakness in manufacturing and services. The U.S. composite index weakened on the month due to service sector slowing. Germany also was weaker in May on a weaker manufacturing sector that dragged the composite lower. The EMU registered a weaker manufacturing sector and its composite index rose in May along with that sector in France and Japan.

Over three months composites increased in the EMU, Germany, France, and the U.K., with Japan and the U.S. showing weaker composites as well as weakness in both manufacturing and services sectors. Over three months the U.K. saw a weaker manufacturing sector as did Germany and the EMU alongside an improvement and their overall composite index. However over six months all countries in all sectors show all sector weakness -except for Japan that shows contrary three sector improvement. All countries show strength over 12 months in all sectors with no exceptions.

The queue percentile standings show an average composite for this group of countries that is below 50, manufacturing gauges that are below 50, by a substantial margin and a service sector average that is below a 50-percentile standing as well. All sectors are below their respective historic medians (below 50) on this timeline. However, including the U.S. in this run of data makes things look worse. After leading the way higher post Covid, the U.S. is now leading the way lower with S&P PMI flash values at standings below their respective 30th percentiles. In sharp contrast, Japan is sporting queue percentile ratings in the 90th percentile for services and for the composite- but a manufacturing reading only at its 66th percentile.

The German service sector and the U.S. service sector as well as the U.S. composite are below their respective levels compared to where they stood in January 2020 before Covid struck.

Month-to-month, of 18 sector and composite readings, only three rose. The composite fell month-to-month on average by 1.8 points led by a 2.5-point drop in manufacturing and a 1.7-point drop in services.