Three Steps Forward, One Step Back for European Consumer Confidence

Three Steps Forward, One Step Back for European Consumer Confidence

After three straight quarters of consumer confidence increases in the eurozone, clouds of pessimism returned in the fourth quarter of 2014, with scores declining in 20 of 32 markets. Only Denmark, with an index of 103, had an optimistic reading above the baseline of 100, and Germany and Switzerland were the only two countries where half of respondents (49% and 56%, respectively) were optimistic about job prospects in the next 12 months. A silver lining could be found, however, in the fact that European consumer confidence was up three points from the previous year.

Confidence in Germany, the biggest economy in the region, increased one index point to a score of 98—a continuation of small upticks that have occurred over the past several quarters to a near-baseline score, which stands in stark contrast to the region’s average index score of 76.

“Looking back over the last 12 months, the stable German labor market likely had a big influence on the country’s consumer confidence score,” said Ingo Schier, managing director, Nielsen Germany. “A combination of factors in Germany boosted confidence in Europe’s largest economy in 2014. A steadily declining unemployment rate combined with low interest rates and rising incomes lifted consumer sentiment and willingness to spend. In the long run, while the geopolitical crises in the Ukraine or Syria are top of mind, they are not yet affecting German consumer confidence.”

The biggest quarterly regional index increase came from Ireland (+6 to 90). Conversely, Russia’s index declined eight points to a score of 79 after three consecutive quarters of increases. Italy (45) and France (57) also declined, dropping two points each, compared to the third quarter.

“In Ireland, 2014 has been a year of recovery,” said Matt Clark, commercial director, Nielsen Ireland. “In November, unemployment figures fell for the 36th consecutive month, and the latest annualized GDP growth is a healthy 3.5%, which is out-performing the rest of the eurozone. While fast-moving consumer good sales are still sluggish, these positive indicators together with an October budget that put a little more money in people’s pockets has lifted confidence and eased a strong culture of saving.”

“In Russia, the economic and political tensions had a fairly limited impact prior to November and December, but the situation dramatically changed with the national currency considerably losing its value and inflation reaching new heights,” said Kyriakos Kyriakou, managing director, Nielsen Eastern Europe. “Purchasing power and disposable income of Russian consumers will continue to shrink, and we expect the situation to worsen in the first half of 2015 when prices for consumer goods will grow reflecting the ruble devaluation. Price as a purchase motivator will become stronger as consumers switch to cheaper brands and cut down on non-essentials.” 

Other findings include:

  • U.S. consumer confidence showed robust year-over-year improvement.
  • All three sub-Saharan African countries measured by Nielsen climbed above a baseline score of 100.
  • Year-over-year consumer confidence scores improved in 39 of 60 countries measured.

For more detail and insight, download Nielsen’s Q4 2014 Global Consumer Confidence Report.

About the Nielsen Global Survey

The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Nov. 10-28, 2014, and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1,600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.