Consumers spending more on services, but buying fewer items; Confidence at record low

Consumers spent more on services in August, but less on goods, according to the country’s national statistics office, CBS. The office said that the biggest factors in the annual change was that the coronavirus measures were still impacting the hospitality and events sectors a year earlier. Consumer confidence also remained at a record low level.

In total, household spending rose by 4.1 percent, with the CBS adjusting for price changes. Spending on services rose by 10 percent. This category, which includes telephone subscriptions, a holiday, a visit to a hairdresser or a visit to a concert or football match, accounted for half of all household expenditure.

The other half is made up from the purchase of goods, with households having spent 6 percent less on this. The decrease was strongest in non-food items. For example, households did spend as much on clothing, shoes, or cars, and they also spent less on home furnishings. They also did not purchase as much food. The decrease was 3 percent.

Consumer confidence holds at historic low

Meanwhile, consumer confidence in October continued to hold at the same low level as in September. At that time, a historic low point was reached. Compared to last month, consumers were less negative about the economy, but the willingness to make purchases also declined further.

Thus, the total metric for confidence remained at minus-59. The component figure for willingness to buy hit a record low not seen since the start of the measurements.

The CBS therefore determined that the circumstances for household consumption in October are less favorable than in August. Similarly, there were more consumers who expected higher unemployment in the next twelve months than there were consumers who expected lower unemployment. The last time that balance was negative was in May 2021.