The European Central Bank added five countries to its CES report, which now covers 96% of the Eurozone’s GDP.
The European Central Bank (ECB) released its December 2023 Consumer Expectations (CES) results on February 6, the ECB announced. Besides showing the latest in consumer sentiment, this release also covered important changes to the ECB’s survey procedure.
Five new countries
A major change occurred beginning with the December 2023 report. Coverage now includes five more countries. These are Austria, Finland, Greece, Ireland, and Portugal. This latest iteration of the report includes 11 countries covering 96% of the Euro zone’s GDP and 94% of its population.
Raising the number of component countries in the ECB calculations adds approximately 40.1 million people, with a combined GDP of approximately 1.581 trillion euro (per 2022 figures) to its base. This is on top of the 286.76 million people and 10.622 trillion euro in GDP of Belgium, Germany, France, Italy, the Netherlands, and Spain.
Consumer Sentiment
The ECB statement adds a proviso that the figures for November 2023 cited in the latest report include data for under the new conditions and that the November figures from the report issued in January may not match.
The newly released data show that consumers perceived lower short-term inflation in December 2023, compared to November. For the 12 months passed, the perceived rate dropped from 7.6% to 6.9%. Moving forward, expectations for inflation dropped from 3.5% to 3.2%. This is the lowest expected rate in two years. Longer-term inflation expectations rose slightly from 2.4% to 2.5%.
Nominal income growth expectations remained at 1.2%; spending growth expectations continued falling and came in at 6.8% in December versus 6.9% in November and 7.0 % in October. Looking forward, nominal spending growth expectations for the next 12 months stayed at 3.6%.
A slight economic contraction is still envisioned for the next 12 months, at -1.3%. At the same time, unemployment is expected to drop as well, from 11.4% in November versus 11.2% now. In general, the indicators point to a generally stable employment market.
The perception of the housing market worsened slightly, with forward looking 12-month expectations for housing prices dropping from a 2.4% rise to 2.2% in December. Likewise, however, perceived mortgage rates looking forward fell from 5.5% to 5.3%. Perceived mortgage access restrictions reached two-year highs in December, but looking forward, access is expected to increase over the course of 2024.
