Spain Consumer Confidence

The Consumer Confidence Index reflects the level of consumer confidence in the stability of the country's economy. The index is compiled based on the monthly telephone survey of 2,000 citizens over the age of 16 representing Spain's different population segments. The survey enables the evaluation of the average economic condition, purchasing power and consumer confidence level. The results are processed by the Center for Sociological Research (Centro de Investigaciones Sociológicas, CIS), which is an autonomous institution subordinate to the Presidential Administration.

The Consumer Confidence Index is comprised of two indicators:

• The current situation index which is based on consumers' assessment of the current economic situation compared to the situation six months ago.
• The consumer expectation index which demonstrate consumers' forecast for the next six months.

A strong consumer confidence report, especially when economy slows down, can sharply push currency markets. The growth of consumer confidence may suggest that people will spend more and will make large purchases (for example, a car or a house). This will lead to an increase in economic activity and an increase in consumer spending. Also, the growth of consumer spending may lead to inflationary growth. The ultimate goal of this index, among a large variety of other economic indices calculated by Spanish organizations, is to create a useful tool for interpreting and predicting changes in the purchasing power of Spanish population. Therefore, the Consumer Confidence Index is usually closely monitored by professional economists.

However, consumer confidence is a very subjective estimate, which depends on the current mood. Therefore, the results should be interpreted cautiously. Many economists evaluate the moving average of the index over 3 to 6 months. If it shows a steady growth or decline, analysts speak of a trend. A higher than expected index growth may cause a short-term euro volatility in the upward direction.