Euro area flash consumer sentiment index falls further in September
Source: FxWire Pro - Commentary / 20 Sep 2018 14:58:22 America/New_York
The preliminary euro area consumer sentiment dropped in September. The largest contribution to the euro area’s growth since 2013 has been made by private consumption. However, in spite of strong growth in employment and an acceleration in wages, in the last two years consumption spending in the euro area has taken a markedly lower growth trajectory than overall economic output.
While the GDP growth was up an above-potential 2.1 percent year-on-year in the second quarter, private consumption growth was considerably weaker at just 1.3 percent year-on-year. That tallies with the stable deterioration in consumer sentiment recorded in surveys, which has extended into the third quarter. Having increased in January to 1.4, the highest level since 2000, the Commission’s consumer sentiment index deteriorated steadily, falling to a 16-month low of -1.9 in August on downgraded assessments of the economic outlook and labor market prospects, and a diminished readiness to make major purchases.
The flash estimate of consumer sentiment in September dropped further to -2.9, still nevertheless the lowest since May 2017. Data related to consumer spending in the third quarter released so far point to a mixed picture, with retail sales off to a weak start but new car registrations surging, noted Daiwa Capital Market Research in a report.
“But, while the labour market appears to continue to strengthen, the steady deterioration in consumer confidence index suggests that we should not expect any significant improvement from the recent consumption trend for a while yet”, added Daiwa Capital Market Research.
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