Are Survey Indicators Useful for Monitoring Consumption Growth: Evidence from European Countries
This paper analyses the information content of two potential survey indicators for consumption growth. Most short-term analyses only focus on consumer confidence, which measures confidence of buyers of consumption goods. However, this paper shows that this is optimal for only three of the eight countries in our sample. For the other countries the retail sales indicator, a measure of confidence of sellers of consumption goods, can improve the quality of short-term analyses substantially. For the UK this indicator even outperforms consumer confidence. For the remaining four countries we show that combining consumer sentiment and the retail sales indicator into a composite indicator leads to optimal results.
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