Economists: Upswing continues

Record-breaking consumer expectations are a sure sign that Denmark´s economic upswing will continue, analysts say.

A new survey on consumer expectations indicates that Danes plan to continue last months´ consumer feast, analysts said on Monday.

Danish consumer expectations boomed in January and had not been higher since 1998, as the indicator for consumer expectations rose to 11.2 in January from 8 in December.

Bank Nordea pointed out that some of the optimism could be traced to January sales, which encouraged consumers to purchase consumer durables, such as large household appliances.

"But it is especially positive that consumer expectations of Denmark´s one-year economic outlook have surged," Senior Analyst Jes Asmussen said, adding that the optimism was clearly not only a seasonal fluctuation.

Danske Bank´s Chief Economist Steen Bocian agreed.

"High consumer confidence gives ground to continued optimism to secure a continued upswing," Bocian said.

Analysts said consumer expectations in coming months might be tainted by less concentrated monthly tax cuts in 2005 than in 2004, where the cuts were distributed over seven months instead of twelve. That could give the impression of lower wages.

Danes´ fear of unemployment calmed in January in spite of unchanged employment figures. Surging housing prices, slow inflation and low interest rates provided consumers with many good reasons to remain optimistic and spend their money in months to come, Asmussen said.

"There is no doubt that last year´s tax cuts successfully turned the tide for consumer confidence," Bocian said. "In one year it has turned from zero to close to breaking a historical record."

The increased consumer confidence is most prominent in evaluations of the country´s economic situation and purchases of durable consumer goods, Statistics Denmark said in its newsletter.

Estimates of Denmark´s economic situation rose to 15.8 in January from 14 in December, while a one-year outlook improved to 9.5 from 6.

Estimates of purchases of consumer durables turned around to 1.3 in January from -7 in December.

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