Estonian Consumer Confidence Improves Slightly but Remains Pessimistic Compared to Neighbors

Estonian consumers are showing a slight uptick in confidence, but the overall mood remains decidedly pessimistic. The consumer confidence indicator stood at -26.1 in July, a modest improvement from the previous month's -29, according to data from Statistics Estonia. Consumers' assessments of their household and national economic situations, both currently and for the next 12 months, saw gains. Notably, their perceived ability to purchase durable goods increased the most.

However, this cautious optimism is tempered by a comparison with the European Union average, which was -15 in July. "Compared to our neighbors, Estonians remain the most pessimistic," noted Raul Eamets, Chief Economist at Bigbank. He elaborated that while the indicator shows a slight improvement, the percentage of people believing the situation has worsened still outweighs those who think it has improved.

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Compared to our neighbors, Estonians remain the most pessimistic.

In the business sector, confidence levels vary significantly. Trade and services sectors reported higher confidence, with indicators at +10.5 and +6.5 respectively. The industrial sector hovered near neutral at +0.3, with optimists and pessimists evenly split. The most concerning trend is in the construction sector, where confidence remains lowest at -14.6. Businesses in this sector cited insufficient demand as their primary constraint, and an increasing number anticipate a reduction in their workforce over the next three months.

Eamets expressed concern over the declining confidence in construction, traditionally an early indicator of broader economic shifts. "The construction sector's confidence decline is worrying, as it is usually the sector where things start to worsen or improve first, with other sectors following," he stated. He noted that despite large-scale infrastructure projects providing employment, the outlook in construction could be more optimistic. Confidence in trade also saw a slight dip, with a significant decrease in merchants expecting sales growth in the coming three months.

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The construction sector's confidence decline is worrying, as it is usually the sector where things start to worsen or improve first, with other sectors following.