Denmark Shows Confidence Improvement; Confidence Metrics Get Slightly Less Negative: Less Unhappy New Year

Something’s less rotten in Denmark Denmark's consumer confidence indicator to start the New Year improved to -8.4 in January from -13 in December. The net negatives still rule; however, the reading is less net negative in January than it was in December 2023. We start 2024 being grateful for small changes in the right direction.

Looking at the averages, the Danish consumer confidence indicator over 12 months displays an average value of -14.2, over six months the average is -11.2, and over three months the average is -10.6. This is a clear progression toward improvement and even more striking when we look back at the previous 12 months, the older 12-month average was -24.2. In addition to that, when we look at the January 2024 reading compared to the three-month average, we see that progress is still in-train. Signs of progress proliferate but curb your enthusiasm, as there is a long way to go to expunge negativism.

Monthly Survey Responses Survey respondents in January assess that the financial situation for the last 12 months was slightly worse than it had been in December; however, for the more important financial situation over the next 12 months, they see an improvement with the index rising to +4.9 from +1 in December. The general economy over the last 12 months was assessed to have improved to a -10 reading compared to -17.4 in December. The general economy reading as expected for the next 12 months moves up to -3.6 from -6.6 in December. The assessment of consumer prices over the last 12 months shows a weaker reading in January than in December; however, for the next 12 months there's some acceleration expected with the January reading at +2.8 compared to December at -2.5. Unemployment trends for the next 12 months are seen as improving: the response value of +10.7 in January is down from +13.9 in December.

The perceived environment The Danish survey also gives us certain environmental factors that consumers assess. The favorability of time to purchase (now), for example, improved in January to -21.6 from -24.3 in December. The favorability of time to purchase in the next 12 months also improved to a -7.3 in January from -8.3 in December. The favorability of time to save at present worsens slightly in January compared to December; the favorability to save over the next 12 months also deteriorates. The general financial situation of households now is assessed as improved at +20.7 up from +18.5 in December, but that still leaves it below its November value of +23. And as we shall see below, ‘better’ is an improvement but does not necessarily make conditions ‘good.’

Steady progress... The categories that are making steady progress to better levels are the financial situation over the last 12 months, the financial situation over the next 12 months, the general economy over the last 12 months, pressure on consumer prices over the next 12 months. There is also improvement in lowering expected unemployment trends, and the favorability of the time to purchase at present and the favorability of the time to purchase in the next 12 months (the latter, despite a monthly deterioration) both are carrying positive momentum. And the favorability of time to save at present has been trending higher as well. That’s a lot of ‘trending higher.’

Still some key deterioration However, the general financial situation of households at present has been deteriorating steadily but slowly from 12-months to six-months, to three-months. Past consumer price inflation, similarly, had been weakening on that progression.

Rankings for confidence metrics: where they stand We have to look at how the metrics have changed monthly, and how they are trending more broadly. Next, we look at where they stand in a queue of ranked values back to the mid-1990s. The far-right hand column sets the current consumer confidence indexes in a grid of rankings and data back to 1995. On that score, the only readings above a 50% mark which represents the median over this period, are consumer prices over the last 12 months and unemployment trends over the next 12 months. Fortunately, the unemployment trends are working to lowered expectations sequentially; however, despite that trend, the level of unemployment expectations (fears) is still nearly a top 25-percentile reading. Meanwhile, things like the general financial situation of households carries a ranking around its 5th percentile- overall an extremely weak ranking. The favorability of time to make purchases at present has a 9.1 percentile standing! The financial situation currently, as well as over the last 12 months, shows standings in the lower ten percentile range.

Some positives but a mixed bag of New Year’s treats and tests There are some improving progressions in the survey and that's certainly good news. However, overall, the general assessment of the consumers’ conditions remains that they are quite weak. There are still some important deteriorations in categories that matter a great deal although fortunately worries about unemployment are not one of those. The survey does improve month-to-month, which is a good start for the year, but there clearly is still a long way to go just to get the Danish consumer to neutrality. Comparing Denmark to the EMU Sentix indicator for January (that has a history back to 2003), the Danish metric has the same rank on the EMU-shortened period as over the span back to 1995. The Sentix reading ranks in its 20.9 percentile. Denmark is doing worse than the euro area overall but both readings are lacking and show ongoing distress.