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Consumer Confidence: US Up, Europe Down
Three separate consumer confidence indexes out this week tell three very different stories.
US consumer confidence is at a three-year high, while consumers in Germany are growing more wary of making big purchases, and their UK counterparts are slightly gloomier about the country's economy.
According to the Conference Board business research group's Consumer Confidence Index, based on 2,500 household responses, US consumers' confidence in the economy picked up momentum in June. The index rose to 105.8 from 103.1 in May, when the index had risen more than five points after a fall in April. The latest figure is the highest since June 2002, when the index stood at 106.3.
The measure of consumers' views of the current economic situation rose to 120.7 from 117.8, while expectations for the next six months rose to 95.8 from 93.4. Feelings about employment also improved. For the first time in nearly three years, the percentage of consumers noting that jobs are 'hard to get' (22.6%) did not exceed the percentage saying that jobs were 'plentiful' (also 22.6%).
However, Lynn Franco, Director of The Conference Board's Consumer Research Center, said June's confidence levels may be hard to sustain given that oil prices, which rose steadily during the month, recently surpassed $60 a barrel.
GfK's latest German Consumer Climate Survey and the GfK Martin Hamblin UK Consumer Confidence Survey paint a gloomier picture. Both studies, each based on around 2,000 consumer interviews and conducted on behalf of the EU Commission, found consumers in an uncertain mood.
German expectations about the economy and incomes have risen slightly, but the propensity to make larger purchases has fallen again. As a result, the consumer climate indicator dropped for the third month in a row. German consumers are still unable to see any real sign of economic recovery. Although the indicator was slightly up on the previous month, rising almost 3 points to -13.4, it was lower than a year ago. Following a sharp fall to minus 13 points in May, the indicator for income expectations rose slightly by 3 points to -9.9, continuing the up-and-down trend of the last two years. The fear of unemployment remains high, with one out of three workers in western Germany and one in two in eastern Germany worried about losing their jobs.
In the UK, the consumer confidence index has fallen for the third month running to -3 (from -1 in May) - its lowest since December 2004 but still one point higher than the same period in 2004. In a reverse of the German trend, consumers seem steady in their perception of personal finances, but their views of the general economic situation are declining.
Perceptions of the UK's general economic situation over the last year fell by five points to -18 in June, while perceptions of the economic situation for the next twelve months fell for the third month running by three points to -10 in June. However, this is still four points higher than June 2004's pessimistic -14.
Following a seven point decline last month (from +12 in April to +5 in May), the major purchases climate measure has fallen only marginally in June, by one point from +5 in May to +4 in June. The perception of whether now is a good time to save remains at +28 and is considerably higher than June 2004 (+21).
The Conference Board's web site is at www.conferenceboard.org . GfK and GfK Martin Hamblin are online at www.gfk.com and www.gfkmh.com
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