Weakening of consumer sentiment

Bern, 06.11.2014 - Having remained above the long-term average since 2013, the general index of consumer sentiment fell below this average to -11 in October 2014.* The sub-indices reflecting expected economic development and expected unemployment, as well as job security reported a significant deterioration in October. Whilst there were no major shifts in the remaining sub-indices, many did show a slight downward trend.

Three of the four sub-indices which are included in the calculation of the overall consumer sentiment index reported a weakening. The expectations of households for the future development of the economy were clearly lower in October (-14 points) compared with July (+5 points). Expectations for the development of unemployment (+51 points in October) were also gloomier (July: +33 points). Despite this development both of the above-mentioned indices continued to paint a more positive picture than during the years of the Euro crisis 2011/2012. By contrast, there was a fall in the index of the savings possibilities over the months ahead (+19 points in October compared with +28 points in July) to the level of the years 2011/2012. Conversely, the assessments related to the future household’s financial situation remain broadly unchanged (-2 points in July and 0 point in October).

In October, households were also clearly less positive about their assessment of the past economic situation as well as the assessment of job security. This follows a continuous improvement in both sub-indices since January 2012. The sub-index of the development of the economy over recent months reached -9 points (+7 points in July). At -57 points, consumers were also less positive about job security in October than in July (-49 points). Although these sub-indices have fallen they still remain clearly above the levels reached during the years 2011/2012. Savings possibilities were assessed as slightly less frequent in October (+40 points) compared with July (+46 points). Households also felt that the timing for larger purchases was less favourable in October (-1 point) compared with July (+8 points).

The other sub-indices comprising the assessment of past inflation and expected inflation, as well as the assessment of the household’s financial situation during the last months showed virtually no change between July and October.

*In the months of January, April, July and October some 1,200 randomly selected households are surveyed on behalf of the State Secretariat for Economic Affairs (SECO) to evaluate their subjective assessment of the economic situation, their personal financial situation, inflation expectations, job security etc. The surveys are conducted by the DemoScope market research institute.

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