October 25, 2022
consumer confidence

EU consumer confidence improves slightly in October versus September likely due to an ease in panic over a looming energy crisis.

The European Commission‘s indicator showed an increase of 0.6 percentage points.

The increase is encouraging but overall the indicator remains close to its record low level. This was established last month.

The war fuelling inflation has reduced consumer confidnece this year. The indicator slumped in March after the start of the war, showing mostly negative readings since then.

EU consumer confidence

Worries persist over the war and inflation which is now spreading throught the economy and beyond energy and food. However, some events have so far eased the loss in confidence.

These include: gas stock levels in Europe reaching more than 92% of capacity; proposed measures from the EU to cap price volatility; and countries enacting plans to help households with energy bills. These factors most certainly helped to ease the hightened anxiety over severe shortages and spikes in energy bills this winter.

The persistent increase in energy costs for most of this year has fueled inflation. It has also placed considerable strain on businesses and household budgets.

The polymer industry has certainly felt the impact of the higher energy costs and inflation this year. Demand has decreased considerably in all market segments. The loss of competitiveness against imports has worsened the situation. And many players along value chains are heavily reducing operating rates in line with a slump in demand.

Some of the worst hit markets include Acrylonitrile Butadiene Styrene (ABS), Polypropylene (PP), and Nylon Engineering Resins (PA6 and PA66).

It is possible that Europe will avoid an enegy crisis and therefore confidence will continue to improve. But the unpredictability of the war make any such forecast highly unreliable.

There could be more downside surprises ahead. One of which is a cold snap drawing down gas stocks which countries will struggle to replenish next year with alternative sources of supply.

The positive reading of consumer confidence this month is certainly encouraging, but there will be little surprise if next month the indicator is back in the red.