Consumer confidence in Estonia rises above historic average

Photo: Urmas Luik / Pärnu Postimees

The consumer barometer reading in Estonia improved in January by six points from December, rising to minus 4 or six points above the long-time average of minus 10, it appears from a fresh study by the Estonian Institute of Economic Research (EKI).

Expectations improved regarding all components of the index, i.e. the economic outlook on both the national and household level, labor market and households' saving possibilities, but increased confidence regarding the labor market situation played the biggest role in the improvement of the index, EKI said.

Significant differences were observed in confidence levels of respondents from different social groups, the institute said. Confidence was higher among the more prosperous, younger people and men. For example, in the 16-29 age group the confidence indicator stood at plus 13 compared to minus 8 among respondents aged 65 and above.

In January Estonians were more optimistic about their own household's situation 12 months from now, with the index climbing from December's minus 8 to minus 2. People who fear the economic situation of their family will worsen still have a small prevalence but compared to the previous month optimism grew precisely among low-income respondents. There is a strong correlation between expectations and current incomes. If of low-income families 22 percent expected the situation to improve and 37 percent to deteriorate, then of the families with largest incomes 34 percent expected things to change for the better and 11 percent, to deteriorate.

The development of the Estonian economy was seen in a more optimistic light and expectations of people with different incomes were more similar than when evaluating their own household's outlook. In January 34 percent of the polled predicted that the country's economic situation will improve over the next 12 months, 34 percent believed the situation would not change and 20 percent feared it would worsen. Expectations regarding the outlook on the national level have reverted to the level of May 2012 and stand one point above the long-time average, EKI observed.

Most families, 51 percent, are making ends meet, 38 percent are able to save some money and 9 percent live either on previous savings or on credit. Estimates of personal financial situation were slightly above the long-time average in January.

If the last few months of 2011 and the first half of 2012 saw increased insecurity regarding the labor market, then in the latter half of 2012 the situation improved and in January respondents in whose opinion unemployment will decrease in 2013 were in the majority.