German and French consumer confidence slump

29 March 2022

Emily Nicol

Japan’s unemployment rate edged lower, but new job offers also fell in February
With Japan still operating a semi-quasi state of emergency last month and Covid cases still extremely high, the latest labour market data for February published overnight were somewhat more encouraging. While the number of people in employment was unchanged on the month at 66.93mn (some 370k lower than a year earlier), this in part reflected a fall in self-employment, with the number of employees up 220k (admittedly following a decline of 300k in January). As such, the number of jobless people fell 30k on the month to leave the unemployment rate down 0.1ppt on the month to 2.7%, 0.4ppt lower than the post-pandemic high but still 0.5ppt higher than the pre-pandemic trough. There was also a modest increase in the job-to-applicant ratio in February, to 1.21, a post-pandemic high and suggestive of a tightening labour market. However, this principally reflected a drop in the number of new job offers in February, by more than 4%M/M, the first monthly fall in seven.

German and French consumer confidence slump at the end of Q1 amid higher prices
Coming on the back of the weak German business ifo survey and consistent with the sizeable deterioration in the Commission’s flash consumer confidence index, today’s German GfK consumer confidence survey painted a pretty bleak picture as the war in Ukraine and surge in inflation weighed. The headline sentiment index fell a larger-than-expected 7pts to -15.5, a fourteen-month low and almost 20pts lower than the long-run average. While this marked the third-largest monthly decline on record, it was considerably smaller than the near-25pts slump recorded at the onset of the pandemic. The survey detail suggested only a ‘modest’ loss in households’ propensity to consume for now at least, with the relevant index down 3.5pts to -2.1, although this still marked the lowest reading since the start of the pandemic, only the second negative reading since the global financial crisis and well below the long-run average (20.7). And the near-term outlook remains highly uncertain as households’ budgets will continue to be squeezed by higher prices. Certainly, there was a notable deterioration in income expectations for the year ahead, with the relevant index down 25pts to -22.1, the lowest reading since the 2002 and roughly 40pts lower than the long-run average.

The French INSEE consumer confidence survey similarly reported a marked weakening in sentiment in March. The headline confidence index fell 6pts on the month – the biggest monthly fall since April 2020 – to 91, a sixteen-month low and well below the long-run average (100). Like in Germany, households were considerable more downbeat about their expected financial situation over the coming twelve months, with the relevant index down in March by the most on record (-15.7pts) to -22.1, the lowest since May 2014. This in part reflected a marked deterioration in consumers’ price expectations, with the related index up 49pts on the month to 39, a new survey high. And so, while there was a comparatively small drop in the share of households considering it a good time to make major purchases – albeit the index fell to its lowest since November 2020 – this seems likely to fall further over the near term.

UK bank lending data due today
In the UK, today brings an update on bank lending in February, with consumer credit likely to have increased as relaxed Covid restrictions, a return to offices and pent-up demand for travel and hospitality provided a boost to spending on services. And with housing market indicators signalling ongoing strength, mortgage lending is likely to have remained robust too

US consumer confidence and JOLTS job openings data due
In the US, today brings several releases including the Conference Board consumer confidence survey. Jumps in prices of gasoline and food are likely to have dampened household sentiment in March, a view supported by the sizeable drop in last week’s University of Michigan sentiment index. Meanwhile, ahead of Friday’s labour market report, today will also bring the February JOLTS job opening figures, while the FHFA and S&P Case-Shiller home price data for January are also due.

Categories : 

Back to research list

Disclaimer

This research report is produced by Daiwa Securities Co. Ltd., and/or its affiliates and is distributed by Daiwa Capital Markets Europe Limited in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority and is a member of the London Stock Exchange and Eurex Exchange. Daiwa Capital Markets Europe Limited and its affiliates may, from time to time, to the extent permitted by law, participate or invest in other financing transactions with the issuers of the securities referred to herein (the “Securities”), perform services for or solicit business from such issuers, and/or have a position or effect transactions in the Securities or options thereof and/or may have acted as an underwriter during the past twelve months for the issuer of such securities. In addition, employees of Daiwa Capital Markets Europe Limited and its affiliates may have positions and effect transactions in such securities or options and may serve as Directors of such issuers. Daiwa Capital Markets Europe Limited may, to the extent permitted by applicable UK law and other applicable law or regulation, effect transactions in the Securities before this material is published to recipients.

This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.


Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at  /about-us/corporate-governance-regulatory. Regulatory disclosures of investment banking relationships are available at https://daiwa3.bluematrix.com/sellside/Disclosures.action.