EMU: EC Consumer Confidence Flash

Highlights

Consumer confidence deteriorated across Europe in September 2026, interrupting four consecutive months of recovery. The European Commission’s estimate shows that the indicator declined by 0.8 percentage points in the European Union and by a sharper 1.0 percentage point in the euro area, reaching minus 16.5 points in the latter. The broader decline suggests that households have become more cautious about their financial circumstances and the wider economic outlook.

The comparatively larger fall in the euro area may reflect greater sensitivity to persistent inflationary pressures, borrowing costs and uncertainty surrounding employment and economic growth. As confidence moved further below its long-term average, households may postpone major purchases and increase precautionary savings. This reversal presents a potential challenge for Europe’s consumption-led recovery. Weaker household expenditure could constrain retail activity, business revenues and overall economic growth.

The decline nevertheless represents a monthly movement rather than a confirmed long-term trend. Subsequent data will therefore be important in determining whether September’s fall is temporary or signals a more sustained deterioration in consumer sentiment. These updates take the RPI to 6 and the RPI-P to 0, meaning that economic activities continue to align with market expectations in the Euro Area.

Market Consensus Before Announcement

Sentiment is losing ground in the Eurozone owing to rising energy costs. The consumer confidence index is expected at minus 16.8 for September versus minus 15.5 in August.

Definition

Compiled by the European Commission, the flash consumer confidence index is a broad measure of consumer sentiment. It is based on monthly surveys of consumers from all the European Union countries. The survey probes into consumers' perceptions towards their past and expected future financial conditions, as well as their feel of the economy overall. This includes topics such as major purchase intentions for the next year, savings intentions, home improvements, purchase of a car, prices and unemployment, among others. This flash measure is based on only partial data and provides an early guide to the final index, published around a week later as part of the full Economic Sentiment survey.

Description

The pattern in consumer attitudes can be a major influence on stock and bond markets. Consumer spending drives the lion’s share of the economy, and if the consumer is not confident, she will not be willing to pull out the big bucks. This Consumer Confidence survey offers key confidence data across the European Union and the European Monetary Union. Consumer confidence impacts consumer spending which affects economic growth. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Since consumer spending accounts for such a large portion of the economy, the markets are always eager to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. The index is a broad measure of consumer confidence in the EU members and because of its coverage of all the EU countries it is highly regarded in the financial markets as a good indicator of the mood of consumers in each country. It is also normally a good indicator of quarterly GDP.

Data are available for each country and are aggregated for both the EMU and EU. The data are seasonally adjusted and defined as the difference (in percentage points of total answers) between positive and negative answers. The survey is conducted by the European Commission rather than Eurostat, the compiler of most other EMU data and measures consumer confidence on a scale of -100 to 100, with -100 indicating extreme lack of confidence, 100 indicating full confidence and 0 indicating a neutral opinion. The long-term average of the series is around -14.

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