French & Italian consumer confidence beats consensus estimatesOn June 26, 2020 by Thomas Belayneh
Figures released today showed Italian consumer confidence rose 6.3 points to 100.6, whilst French consumer confidence also rose by 2 points to 97. The Italian number was driven by consumers’ improved assessment of the current economic climate and the French reading by a jump in intentions to make a major purchase over the next twelve months.
The Italian index, which is rebased to 100 (2010), is now above the March’s reading of 100.1, beating expectations for 97.5, while approaching February’s pre-lockdown reading of 110.5.
However, the ‘Current Climate’ part of ISTAT’s index, which averages both the general economic situation, as well as current household finances, barely moved, increasing by just 1.4 points to 96.4 in June.
This disconcerting feature of today’s news puts in doubt a quick recovery of consumer spending in the short run. June’s figure remains below February’s and March’s readings of 110.6 and 104.8 respectively. Despite this, forward twelve-month expectations of the general economic and household finances situation rose sharply by 12.5 points to 105.6.
France’s consumer confidence index, whilst rising 4 points to 97 and beating expectations for 95, was still below its normalised long-term average (100).
Intentions to make major purchases over the next twelve months jumped 31 points moving back up to its long term average of -14 after falling 34 points in April.
Expectations of household finances and standard of living over the next twelve months also jumped by 12 and 17 points respectively, although both measures remained below long term averages with the latter particularly weak by historical standards.
Standards of living over the past twelve months continued to decline and fell 6 points in June, whilst households’ fears about unemployment rose two points to a seven-year high. Accompanied with increases in the current and expected saving capacity, this suggests consumer spending is to remain subdued in the near term.
Thus, although rises in the headline figures look comforting for both Italy and France, uncertainty over the economy lingers. As restrictions are eased and employees return to work, the data suggests a desire for conservatism, at least in the short run, which is hardly good news for cyclical businesses.
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