“The unemployed population increased by another 10,000 in May, the second monthly increase in a row. This could start to have an effect on growth, as consumer confidence declined in June on the back of growing unemployment fears,” argue ING analysts.
Key quotes
“The 12,400 increase in the unemployed population registered in April was not a one-off after all: 10,300 new unemployed were registered in May, leading to the largest increase in almost a year. Since the beginning of the year, figures have been disappointing, even accounting for the strong decline registered in February. “
“This has had an impact on consumer confidence which declined from 99.3 to 97 in June, its lowest level since August 2016. The fear of unemployment, which had been receding in the last 12 months, bounced back in May, leading to the drop in the overall index, together with a fresh drop in purchasing intentions. The second quarter confidence data doesn’t bode well for private consumption growth during the summer.”
“Second-quarter spending growth should show a rebound after a dismal start to the year, although it will be weakened by the effects of strikes on holiday consumption during Easter and the long weekends of May. In 2018, we therefore continue to believe that private consumption will only post a very meagre acceleration from the weak 1.1% registered in 2017.”
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