Netherlands: Consumer sentiment increases in March
Consumer sentiment rose to minus 39.0 in March from February’s minus 44.0. March’s result marked the best reading since March 2022. As such, the index remained entrenched below the 0-threshold, indicating pessimism among consumers.
The improvement was broad based for all the subcomponents of the index. Consumers were less pessimistic about the economy in the past 12 months and in the next 12 months. They were also less pessimistic about their financial situations in the past 12 months and the next 12 months, and regarding their willingness to make large purchases.
Generous fiscal support, rising wages and lower inflation should support consumer confidence going forward. Meanwhile, high levels of private debt, in conjunction with higher interest rates from the European Central Bank, will weigh on private consumption. Tighter-than-expected ECB monetary policy and the fallout from the recent banking turmoil are risks. A potential pivot in house prices is a key factor to watch. On the one hand, it bodes well for housing affordability, benefitting consumers. On the other hand, it could lower households’ net wealth.