Economy in Brief

Danish confidence sank further in October, falling to -8.9 after registering -6.8 in September. September had been a small improvement from August at -7.4 but now confidence has dipped below its August value. Confidence was last weaker in December of last year.

Inflation concerns are beginning to rise in Denmark as well. Inflation expectations that rose sequentially over the last 12 months are once again rising sequentially as we look ahead to the next 12 months.

Monthly trends The financial situation has eroded steadily over the last 12 months and continues to erode with the October reading, falling to -1 after posting +2.9 in September and +3.2 in August; this is small but steady slippage.

The outlook or assessment for the general economy has slipped over the last three months, but looking ahead at prospects for the general economy there is a small improvement but the last three monthly values are all net negative values and there doesn't seem to be any strength in that assessment. That conclusion is further underscored by unemployment trends that have worsened sharply over the last three months, with an August reading of plus 5 followed by a September reading of 9.5 and an October rating of 10.2; concerns about unemployment have risen.

The assessment of the environment monthly shows little change in the favorability of the time to purchase goods, with consistent negative readings over the last three months; the favorability looking forward to the next three months slips with October falling to -8 after having negative readings in the minus 5 region in both August and September. The general financial situation of households, however, does show some snail’s pace improvement, with the August reading of 24.8 moving up to 26.3 in September and moving up further to 26.9 in October.

Sequential trends Danish confidence is not improved very much sequentially although it's made a very small improvement from a -7.9 12-month average to an average of -7.7 over three months. The present situation improved over the last 12 months, with the last three-month assessment at -6.8 compared to a 12-month average of -9.3; there was still slippage compared to six months ago. The assessment of financial situation looking ahead, while positive, shows a decreasing positive value; a 12-month average is 3.5 with a three-month average slipping to 1.7. The assessment of the general economy sequentially looking backward had slipped over the last 12-to-six-to-three months; looking ahead that slippage continues as the 12-month average of -6.1 moves to -6.9 over six months and the average drops further to -9.0 over three months. As noted above, the outlook for inflation had been worsening and it continues to worsen even more sharply for the 12-months ahead. Unemployment expectations had improved sequentially from 9.3 over 12 months to 7.7 over six months and 8.2 over three months – but the monthly pattern unwinds the sequential trend.

The favorability of the environment to purchase is becoming progressively less negative sequentially. The favorability to purchase envisioned over the next 12 months has continued that progression with very small improvements. The three-month pattern that shows an increase in the general financial situation of households has extended this broader progression from 12-months to six-months to three-months that has generally been improving but has been improving slowly and actually saw a slight setback in the three-month to six-month progression.

Rankings for readings The rankings of these assessments are predominantly weak with the consumer confidence indicator weaker only 10.6% of the time. The financial situation over the last and the next 12 months both have rankings below their 10th percentiles. The general economy looking ahead has a ranking in its 15.5 percentile. The outlook for inflation over the last 12 months was high at its 89th percentile; over the next 12-months its standing is lower but is still high at a 79th percentile. The unemployment trends over the next 12 months have a 73.3 percentile standing, relatively high and well above the median which occurs at a ranking of 50 percent. The environment shows the favorability of the time to purchase is weak with a 15.2 percentile standing. Looking ahead, that improves but only slightly to a 20.6 percentile standing. The favorability of the time to save both currently and looking ahead has a 53-percentile standing, moderate, and slightly above average. Meanwhile, the general financial situation of households comes in above its median with a 60.3 percentile standing and logs the brightest reading in the table – although a 60-percentile standing is not particularly strong.