Netherlands consumer confidence improves further

Netherlands household consumption grew by 0.7% m-o-m in August, after a 0.4% decline in July. If household consumption remains constant in September, quarterly growth in 15Q3 will amount to 0.5%. The positive outlook for consumption growth is based on several factors that are working in the right direction. First of all, consumer confidence has improved further over the past couple of months. 

The headline index increased from 5 in September to 8 in October, the highest level in eight years. The sub-indicator economic climate increased by 6 points to 20. Consumers became more optimistic about their economic situation over the past 12 months and slightly less optimistic about their economic situation looking forward. Willingness to buy increased by 2 points to 0. 

Furthermore, consumption is positively influenced by the gradual increase in employment and high number of home sales. Employment increased slightly in the period July-September. Momentum of home sales was 15.3% in September, whereas the momentum of prices amounted to 0.9% (seasonally adjusted). The decline in inflation earlier this year is positively influencing consumption through its upward effect on real wages. Next year, households will also benefit from the EUR 5bn planned tax reduction.