Business confidence rises EK says, but consumers more cautious in November

The data used for both consumer and business confidence indicators this month were collected before the emergence of the new coronavirus variant Omicron made headlines.

Image: Henrietta Hassinen / Yle

Business confidence levels in Finland continued to rise in November, according to the Confederation of Finnish Industries' (EK). The employer lobby found that confidence grew in the industrial, construction, retail and trade sectors.

However, the confidence indicator for service sector firms weakened slightly compared to October, but remained above the long-term average, according to the confederation.

"Yes, confidence within the Finnish business community is unusually high. Overall, the last time it was at a higher level was in April 2007, EK's director, Sami Pakarinen, told news agency STT.

However, the responses to EK's confidence survey were gathered before recent news about the emergence of the new coronavirus variant, Omicron, had a chance to cast a pall over economic confidence.

Pakarinen said that the impact that the new variant has on confidence levels will be known after the results of the next confidence indicator are released after the Christmas holiday, adding that not much is known about Omicron at this point.

The global post-Covid recovery has already begun to slow down in some parts of the world, Pakarinen said, adding that such a development had started in Central Europe, but had not reached Finland.

"There's been a slight decline in consumer confidence, while confidence in the US has been declining for some time. The business cycle will mature at some point — it can't continuously accelerate," he said.

Consumers' inflation worries

According to Statistics Finland's consumer confidence indicator, confidence levels in the country decreased in November compared to the previous month. While consumers' perceptions of their current finances were positive, expectations about their financial future, and especially Finland, weakened.

Inflation is already being felt by consumers, according to the number-crunching agency. In November consumers' assessments and expectations about their finances were well above long-term averages.

The chief economist at Danske Bank, Pasi Kuoppamäki, said in a statement that consumers and businesses had anticipated continued economic growth into the final quarter of the year.

"However, the new Covid variant and the raising of coronavirus restrictions are causing concern, which will likely be reflected in an economic growth slowdown compared to earlier expectations for this winter," Kuoppamäki stated.

Statistics Finland's consumer confidence indicator was 1.2 in November, down from 2.7 in October and 6.0 in September. In November 2020 the indicator stood at -4.8, and the long term average is -1.7, so current consumer confidence levels are more positive than usual.

Results for the agency's indicator were also measured before news about the new Covid variant, as Statistics Finland collected its data from 1-18 November.