Surprising drop in consumer spending in 2013
Low consumer confidence has led people to save rather than spend
Danes spent less money in 2013 compared to 2012 according to new figures from construction industry lobby group, Dansk Byggeri.
In the first eleven months of 2013, Danish businesses turned over 0.7 percent less than the same period in 2013. The figure grows to 1.5 percent below the previous year after adjusting for inflation.
The news is surprising after optimism that 2013 would see a resurgence in consumer spending.
“Compared to 2012, the figures from 2013 paint a surprisingly negative picture of the domestic market,” Dansk Byggeri chief consultant Bo Sandberg told Politiken newspaper. “A rise in private consumption is what we really need before we can believe we are on a sustainable rebound.”
Sandberg added that the financial crisis and dropping house prices may have affected consumer confidence, leading people to save rather than spend.
According to the latest numbers, some areas of the economy have boomed in the past year, including the knowledge industry – up 6.6 percent – and the hotel and restaurant industries – up four percent.
The biggest losers are the information and communication industries – down 5.1 percent – and the transport industry – down 6.7 percent.
Some positive signals
Despite the dismal numbers, Denmark has increased its exports, particularly to Germany, while businesses have started to invest in machinery, which Dansk Byggeri considers a positive sign.
But Danske Bank does not anticipate that Denmark will return to pre-crisis levels of spending any time soon.
“We should remember that we came from a situation where we spent a lot of money in comparison to both other countries and what we used to spend. Many remain technically insolvent, or close to it. That is why it’s unlikely that will start to use as much money in the coming years. It’s probably a good thing,” Danske Bank chief economist Steen Bocian told Politiken.