FRANKFURT (MNI) – The ongoing weakness in Eurozone consumer goods
output is hardly surprising, analysts said, noting the three-year low
household morale and jobless fears at their highest since early 2010.
After four consecutive quarters of contraction, consumer goods
output slipped another 0.7% in July, whereas as capital and intermediate
goods recovered. Consumer goods output was 3.3% lower on the year, with
durables alone down 9.4%.
“Obviously, people are concerned about losing their job, concerned
about the euro crisis, about their personal financial situation,” said
ING senior economist Martin van Vliet. The drop in consumer durables “is
fully consistent with the weak economic backdrop we’re seeing in the
Eurozone as a whole.”
The fall in non-durable consumer goods output suggests that
consumers are cutting back on more than just discretionary purchases. “I
think the story extends beyond the durable goods sector,” van Vliet
added.
Howard Archer at IHS Global Insight was also not surprised at the
weak consumer goods figures, noting high unemployment and the
possibility of a further rise: “It ties in with all the evidence that
consumers are still very reluctant to spend in the Eurozone.”
With the risk of a Greek exit from the Eurozone still looming, a
sustained turnaround in consumer spending appears a long way off, Archer
said.
“I still think that, overall, consumer spending in the Eurozone is
unlikely to be anything more than flat next year after a likely
significant contraction through 2012,” he said.
ING’s Van Vliet was also not optimistic on a consumption-led
recovery. “Any recovery will be led by exports in the Eurozone,” he
predicted.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com —
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