Consumer confidence

Graph of cycle: Consumer confidence

Full name

Index of consumer confidence.

Definition

The index of consumer confidence indicates the extent to which households think that the economy is doing better or doing worse. Consumer confidence is based on the sentiments of households about the economic climate in general and about their own financial situation.
Every month Statistics Netherlands conducts the consumer confidence survey among around one thousand households. They are asked five questions, and may answer positively (the “optimists”), negatively (the “pessimists”) or neutrally (i.e. the situation remains/has remained the same). The indicators are calculated by subtracting the percentage of pessimists from the percentage of optimists.

Other information

The questions are:

• In general, do you think that the economic situation in the Netherlands in the last twelve months has improved, deteriorated or stayed the same?
• And what about the next twelve months? Will the economic situation in the Netherlands improve, deteriorate or stay the same?
• If you think of large expensive goods, like items of furniture, a washing machine, or a TV, do you think now is a good time or a bad time, or neither to buy these items?
• Has the financial situation of your household improved, deteriorated or stayed the same in the last twelve months?
• How do you expect the financial situation of your household to develop in the next twelve months? Will it improve, deteriorate or stay the same?
  

The average net optimists minus pessimists for the first two questions is called the “economic climate indicator”. The average net optimists minus pessimists for the last three questions is called the “willingness to buy indicator”. Consumer confidence is the average net result for all five questions.

Business Cycle Tracer versus Economic Monitor

As the starting points and methods of the Business Cycle Tracer (BCT) differ from other statistics compiled by Statistics Netherlands, the presentation of various indicators in the BCT may differ from their usual presentation. The main distinctions are explained below.

General remarks

The BCT focuses on the whole and the combined action of the various business cycle indicators. It does not aim to present an analysis of individual indicators; it is concerned with the cluster, not the individual points in the cluster. However, to enable the combination of the various business cycle indictors in the BCT, the business cycle indicators must be processed and presented in the same way. The specific procedure followed in the BCT is based on methodological considerations and the requirement of uniformity.
This presentation may thus differ from the usual presentation of that same indicator. For an analysis of recent developments in a certain indicator, therefore, the relevant page of the Economic Monitor or the press releases of Statistics Netherlands on that subject should be consulted. The BCT does not claim to give a “better” analysis of indicators Statistics Netherlands already publishes; it does claim to present a coherent uniform and total analysis of the economy at a particular moment in time by concentrating on the cyclical component in the development of the indicators.
The indicator in the BCT may differ from its usual presentation on the following aspects:

Long-term trend

The BCT uses a “flexible trend”, in most statistics of Statistics Netherlands some form of rigid trend is usually used.

Length of trend

In the BCT, long-term trends must be based on a period of at least a few business cycles, and thus require long series. In practice, continuous series are not available because of trend breaks. This means that in some cases trend breaks must be repaired temporarily, or that a new “synthetic series” must be made (n.b. not claiming to give a better analysis of the indicator concerned, but only to enable calculation of the coordinates of the indicator).

Short-term developments

In the BCT developments are “filtered” to some extent, to prevent indicators shooting back and forth from one quadrant to another (“flashing light”). In most statistics of Statistics Netherlands this effect is not filtered out, and the most recent monthly figures (or moving averages) are published.

Adjustments

The BCT portrays the business cycle at a certain moment in time (and thus does not describe the situation for a certain period). This means that the “picture” in the BCT (the position of the indicator in one of the quadrants) will never change (the photo has been taken). Adjustments in certain indicators will thus not be reflected in adjustments of the BCT for a certain point in the past. A movement in the most recent BCT (compared with the BCT at a previous measurement date) may be the result of the addition of a new survey period, but may also be a consequence of the adjustment of an indicator. The BCT thus portrays the “real-time” indicators.
(The above explicitly applies to the coordinates of the BCT but not to the cycles included in the description of the individual indicators: the coordinates of the BCT are exclusively based on the most recent development of the cycles).

Corrections for seasonal/working day effects etc.

In principle, the figures used for the BCT have been corrected for the seasonal effects (which in turn have already been corrected for working day effects). Some statistics are not corrected for seasonal and working day effects, and those that are corrected, are not necessarily corrected using the “standard “processes” necessary for the BCT. Although the usual adjustment processes and presentation of the indicator concerned were taken into account as much as possible in the choice of adjustment criteria for the BCT, differences cannot be entirely excluded.