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Aline Schuiling, senior economist at ABN AMRO, points out that according to the quarterly Eurozone sector accounts, the savings rate of households (gross savings divided by gross disposable income, and therefore the flipside of private consumption) jumped to its highest level in more than four years in 2019Q1, rising to 12.6%, up from 12.1% in 2018Q4.

Key Quotes

“This rise in savings seems to mainly reflect higher precautionary savings. Indeed, the details of the European Commission’s consumer sentiment survey show that consumer confidence has fallen since the middle of 2018, particularly because consumers became less positive about the economic outlook and the prospects for the labour market.”

“Moreover, the details of the consumer sentiment survey show that participants planned to increase their savings during the next twelve months. The rise in the savings rate, combined with our expectation that employment growth will slow down in the coming quarters, suggest that private consumption will grow modestly throughout this year.”