Ignored in the hula-balloo of the euro crisis, the real side
of the euro area economy is clearly not firing on all cylinders. In particular,
the confidence indicators continue to signal underlying structural weaknesses
both on the producer and consumer sides.
Here are the latest indices for consumer and producer
confidence across the EU and euro area. The present post deals with Consumer
Confidence, with subsequent two posts discussing October data for Producer
Sentiment and Economic Sentiment.
Overall Consumer Confidence for EU27 has declined from -19.1
in September to -20.2 in October. 3mo MA is now running at -18.7 which is
significantly below the 6mo MA of -15.9. Year ago, the index stood at -11.5
against the historical average of -11.1, pre-Euro average of -10.7 and Euro-era
average of -11.8.
Euro area Consumer Confidence index stood at -19.9 in
October, down from -19.1 in September. 3mo MA in October was -18.5 against 6mo
MA of -15.3, so the underlying trend in recent months is down. Historical average
ins -12.2 and pre-Euro era average is -11.3 against Euro era average of -13.2.
It is worth noting that the declines between pre-Euro era
and Euro era averages in deeper for Euro area countries, strongly suggesting
that the introduction of the Euro overall has been associated with an average
decline in the consumer sentiment in the Euro area members states that cannot
be explained by the variation in consumer sentiment within the overall EU.
Further, per charts above, German Consumer Confidence has
fallen from -1.9 in September to -3.3 in October, remaining below zero for the
second month in a row. German Consumer Confidence 3mo MA was -1.7 in October
against 6 mo MA of +2.6. Historical average is -8.1. Pre-euro era average for
Germany is -7.6 against the average of -8.8 for the period following the
introduction of the euro. Once again, the swing downward from pre-euro period
to post-euro period is larger for Germany than for EU27.
Spanish Consumer Confidence has fallen from -17.0 in September
to -19.6 in October, with 3mo MA of -17.9 against the 6mo MA of -15.8. As with
Germany, pre-euro period average index reading was -10.9 and post-euro
introduction the average is -16.0, showing clearly that introduction of the
euro in Spain was not associated with an improvement in consumer sentiment.
France’s Consumer Confidence index continued to signal
contraction in demand, albeit at slower pace. October reading came in at -24.3
against -28.4 in September. 3mo MA stands at -26.3 against the 6mo MA of -23.0.
France was the only country of the large euro area economies that saw an
improvement in consumer sentiment since introduction of the euro: pre-euro
period average reading for France was -19.4 against post-euro introduction the
average index reading is -17.1.
Italy’s Consumer Confidence had posted a decline from
already abysmal -31.1 in September to -33.9 in October. 3mo MA is now at -31.3
against the 6mo MA of -29.0. Just as Spain and Germany, Italy shows signs of
decline in consumer confidence since introduction of the euro. Pre-euro period
average index reading is -12.9 against a statistically significantly lower
post-euro introduction average of -17.1. Of the Euro Big-4 economies, Italian
consumers showed the greatest adverse impact of the euro introduction.
Oh, and the thing is… on average, across the Euro area itself,
the same problem remains:
As shown above, the trend in consumer confidence over time
was up pre-euro introduction. With euro introduction, the trend has been down.
