Denmark: Consumer confidence falls in April amid protracted labor dispute
April 20, 2018
The consumer confidence index released by Statistics Denmark fell to 7.1 points in April, down from 8.5 points in March. Despite the fall, the index remained comfortably above the crucial zero-point mark that separates optimism from pessimism among consumers, where it has been since January 2017.
In April, consumers were less optimistic about their personal financial situation in the past year, as well as for the coming twelve months. Consequently, they were less inclined to make big-ticket purchases, whether immediately or in the coming year. Their view of the country’s current economic situation deteriorated slightly, but on the other hand they were more optimistic about the country’s prospects in the coming year. Notably, consumers kept expecting unemployment to fall throughout the year, albeit at a slower pace than they did in March.
Lower consumer confidence in April occurred as the country has been experiencing a protracted showdown between the government and unions over public sector wages, which effectively threatens to grind the country to a halt if no agreement is reached quickly. After postponing the date two times, unions are now scheduled to begin countrywide strikes starting 8 May, which would trigger a retaliatory “lockout” of 450,000 public sector employees by the government. According to analysts, the relatively slow progress in negotiations likely contributed to the decline in consumer sentiment in the month.
Author: Joffrey Simonet, Economist