Eurozone consumers less confident in February - ING

Analysts at ING noted that the Eurozone consumer confidence declined from -4.8 to -6.2 in February. 

Key Quotes:

"Higher inflation and political uncertainty are weighing on confidence, but the current reading is still consistent with firm demand growth in Q1.

Over recent months, geopolitical risks and inflation took a back seat to improvements in employment. With elections getting closer and inflation near 2%, confidence has declined for the first time in six months. 

While surveys indicate that many Europeans are still getting back to work at the start of 2017, it seems that higher inflation and political uncertainty at home are starting to weigh on confidence numbers. It has to be said that the current reading is still well above the long-term average for the indicator.

The breakdown of last month’s consumer confidence figures reveals that consumers were already getting more worried about the general economic situation in January. 

Worries about unemployment were still falling significantly, while expectations of higher prices surged to the highest level since early 2014. Nominal wage growth is still very weak, which will likely make real wage growth negative or flat in the first quarter. 

That means that the employment recovery is the most important cylinder on which Eurozone domestic demand is firing. That means that while consumer spending is likely to continue to grow at 0.4% QoQ, downside risks to that outlook are emerging."