European Central Bank (ECB) Survey: Consumer Expectations for Nominal Income Growth Remained Stable

The European Central Bank (ECB) has released the latest results / findings from the consumer expectations survey results, covering the April 2024 period.

When compared with March 2024, the ECB update reveals:

  • median consumer inflation perceptions over the previous 12 months were unchanged, while median inflation expectations for the next 12 months and for three years ahead both edged down;
  • expectations for nominal income growth and nominal spending growth over the next 12 months remained stable;
  • expectations for economic growth over the next 12 months became less negative, while the expected unemployment rate in 12 months’ time was higher;
  • expectations for growth in the price of homes over the next 12 months increased, while expectations for mortgage interest rates 12 months ahead remained unchanged.

The ECB report noted that the median rate of perceived inflation “over the previous 12 months was unchanged at 5.0%.”

Median expectations for inflation “over the next 12 months edged down to 2.9%, from 3.0% in March.”

They are now “at their lowest level since September 2021.”

At the same time, ECB pointed out that the “median expectations for inflation three years ahead edged down to 2.4%, from 2.5% in March.”

Inflation expectations at the one-year and three-year horizons “remained below the perceived past inflation rate.”

Uncertainty about inflation expectations “over the next 12 months remained unchanged.”

Developments in inflation perceptions and expectations “remained relatively closely aligned across income groups, albeit somewhat lower for the highest income quintile.”

Younger respondents (aged 18-34) continued “to report lower inflation expectations than older respondents (those aged 35-54 and those aged 55-70), although there was a convergence of inflation perceptions across age groups.”

ECB also mentioned in the update that consumer expectations “for nominal income growth remained stable at 1.3%.”

Perceptions of nominal spending growth “over the previous 12 months decreased slightly to 6.3%, from 6.4% in March.”

According to the ECB report, this decline was “observed solely in the older respondent groups (those aged 35-54 and those aged 55-70).”

Expectations for nominal spending growth “over the next 12 months remained stable at 3.6%.”

As stated in the ECB update, economic growth expectations “for the next 12 months were less negative, at -0.8% compared with -1.1% in March.”

By contrast, expectations for the unemployment rate 12 months ahead “increased to 10.9%, up from 10.7% in March.”

Consumers continued to expect “the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.6%), implying a broadly stable labor market.”

The ECB update further noted that quarterly data showed “that unemployed respondents reported a decrease in their expected probability of finding a job over the next three months, which fell to 27.5% in April, from 30.5% in January.”

Employed respondents also reported “that the expected probability of job loss over the next three months increased to 10.6% in April, from 8% in January. (Labour market and economic growth results)”

Consumers expected the price of their home “to increase by 2.6% over the next 12 months, which was 0.2 percentage points more than in March.”

ECB also mentioned that households in the lowest income quintile “continued to expect higher growth in house prices than those in the top income quintile (3.2% and 2.3% respectively).”

Expectations for mortgage interest rates 12 months “ahead remained unchanged at 5.0%. ”

As in previous months, the lowest income households “expected the highest mortgage interest rates 12 months ahead.”

ECB added that the net percentage of households “reporting a tightening (relative to those reporting an easing) in the access to credit over the previous 12 months saw a further slight decline, as did the net percentage of those expecting a tightening over the next 12 months.”

The share of consumers who “reported having applied for credit during the past three months, which is measured on a quarterly basis, remained unchanged from January at 16.8%.”

The release of the CES results for May is scheduled for 28 June 2024.

The CES is a monthly online survey of, currently, “around 19,000 adult consumers (i.e. aged 18 or over) from 11 euro area countries: Belgium, Germany, Ireland, Greece, Spain, France, Italy, the Netherlands, Austria, Portugal and Finland.”

The results are used for policy analysis and complement other data sources used by the ECB.

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