Several Western Europe economies, namely Germany, United Kingdom and France, reported moderate growth in Q1 with consumer spending between 1% and 4%. However, the escalating European debt crisis that has damped confidence in Q2 may impact future growth. In North America, the contrast between increasingly optimistic Canada and cautiously restrained U.S. is being reflected in dollar sales. Across both the U.S. and Canada consumers are cutting back on shopping trips, seeking value and establishing a balance of branded and store brand purchasing.

Advertising spending also improved in Q1 as 25 of the 31 countries reported in Nielsen’s Global Ad Spend Report experienced gains of greater than or equal to 5%. Two globally significant events – Winter Olympics and FIFA World Cup – were driving forces behind this trend. Economically struggling countries Japan, Ireland and Spain were the only countries with flat to declining ad spending in Q1.

What to Watch
In the second half of 2010, against the backdrop of a shaky global economy, consumers in emerging markets will remain more willing to spend on discretionary categories such as apparel, vacation and out-of-home entertainment. In the developed economies where a largely jobless recovery is taking place, the consumer remains very reticent as they are closely monitoring their spending. Value remains the mantra and the new normal is characterized by restraint.

Download the Q2 2010 Nielsen Economic Current.

As we focus our attention on 2010, clearly the global marketplace is redefining itself. Not only in economic terms but more importantly in consumer terms. Consumers are more diverse, demanding and connected than ever before. To help give you a clearer look into what’s ahead, Nielsen has assembled videos from our global team to deliver insights into what consumers watch and what they buy. With evidence of a recovery emerging, understanding the global trends and local conditions is essential to success.

The United States and remaining Western Europe continue to lag but are showing moderate signs of growth as well. This illustrates the pace of recovery which will be quicker across emerging economies in Asia, and Brazil but measured across developed economies.

Download the full Nielsen Economic Current.

Download the complete data and analysis in the North American Economic Current.

“While these results are encouraging, consumers in most parts of the world remain cautious about spending their money, and are increasingly moving to value channels.  At the same time, retailers are selling more on promotion.  It’s likely these trends will continue until economic recovery has solidly taken root,” said James Russo, Vice President, Global Consumer Insight at The Nielsen Company.

Nielsen Economic Current Key Indicators
Country	Trend	Aug-09	Sep-09
Brazil		1	1
Canada		2	2
China		2	2
France		3	2
Germany		3	4
Hong Kong		2	2
India		1	1
Italy		3	3
Spain		3	3
Taiwan		3	1
United Kingdom		2	2
United States		3	3
Source: The Nielsen Company 1=Very Strong Growth >/= +5%; 2 = Growth between +1 and +4%; 3 =Neutral Between -1 and +1%; 4 =Negative between -1 and -4%; 5 = Very Negative

Country by Country Highlights

• U.S. – Consumers continue to be skittish about the recovery and their willingness to spend money.  Store brands, value channels and buying on promotion all showed growth as manufacturers continued to step up incentives and deals.
• Canada – Volume and value sales grew in September 2009, with strong growth in the number of retailers selling on promotion.  Unit sales rebounded as price increases stabilized at 2 percent.
• France – Volume and values sales showed some growth, but with confidence dropping in the September survey, French shoppers actually reduced their shopping frequency.
• Germany – Volume sales remained neutral, while value sales recorded a small decline.  Germans continue to watch their Euros as their confidence in the economy has dipped.
• U.K. – Volume sales improved, and premium brands returned to growth.  Consumers were taking advantage of the strong promotions on offer, shopping more frequently and spending more per trip – despite slightly decreased consumer confidence.
• Italy – Italian consumers cut back the frequency of their shopping trips, but spent more per trip, taking advantage of retailer promotions and switching to store brands.  Volume was up, but value sales were down.
• Spain – Spaniards remained neutral in their spending habits, but did start shopping more frequently for the first time in nine months.
• Brazil – All indicators show that Brazil has returned to levels prior to the global economic crisis.  Volume and value sales were up, and shoppers were feeling confident: shopping frequency and spend per trip both increased.
• India – Volume and value sales indicators each posted better than 5 percent growth, and Indians are feeling very optimistic about the economy and finances.
• China – While retail sales were relatively flat, growth is now apparent in modern trade outlets, which may be the first sign of fast moving consumer goods sales recovery.
• Taiwan – Volume and value sales increased solidly for the first time in nine months.
• Hong Kong – Increased consumer confidence has driven growth of volume and value sales.

The Buzz
In an analysis of blog buzz in seven countries, Nielsen found that online discussions about the global recession have leveled off as consumers have accepted the “new normal.” At the same time, however, mentions of recovery have not gained traction, and actually declined in the most recent week reviewed.

“It seems as if people are accepting the new reality of an ever present recession, which through our analysis of online buzz illustrates that despite a dip in recession discussions in the spring, that they have now leveled off but not subsided completed. Perhaps it is not on the front burner for all consumers as it was in 2008 thru mid 2009, but definitely still on the back burner where it continues to impact consumer decisions,” concluded Russo.

• Download the Nielsen Economic Current.

Sentiment = Sales
“A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery — the tide has turned,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “In this economic climate, sentiment is closely correlated to actual sales. For example, in Australia, consumer confidence was up 11 points in the third quarter, and strong economic conditions prompted the Reserve Bank of Australia to raise rates, becoming the first G20 country to do so. Correspondingly, we have seen sales increase 2 percent in each of the last two months in defined fast moving consumer goods (FMCG) categories while online sentiment (buzz) regarding the recession is at the lowest levels since we began tracking that dynamic in January 2009.”

• Read additional insights on global spending trends in the Nielsen Economic Current

Majority of countries show gains
Consumer confidence rose in 45 out of the 52 countries compared to six months ago (Ukraine and Saudi Arabia were added in the latest round of the survey).  In April, the Index hit its lowest point of 77 index points, but as massive stimulus plans began to take effect around the world during the second quarter, consumer confidence slowly began to recover.

Key Highlights

• Consumers in India, Indonesia and Norway topped the confidence index, while the most pessimistic consumers were in Latvia and Japan.
• Hong Kong posted the largest consumer confidence increase in the third quarter compared to Q2, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points).
• Among other BRIC nations, consumer confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter.
• Consumer confidence fell in only two countries in the third quarter: Spain (-4) and Japan (-2).
• Australia and New Zealand also posted double-digit increases during the last quarter, while Europe’s two largest economies, France and Germany, posted the highest increases in the Eurozone, up 7 and 5 points, respectively.

Nielsen’s global consumer confidence in October rebounded to almost the same level as the first half of 2008 before the very worst of the financial crisis hit global markets. “The survey shows how much the pace of economic recovery has accelerated in the last six months, especially in Brazil and some Asian markets,” said Russo.  “Nielsen consumer, retail and media data also shows a trend of consumers shifting gears from recessionary into recovery mode.”

The Nielsen Global Consumer Confidence Index tracks consumer confidence, major concerns and spending habits among more than 30,500 Internet users in 54 countries. The latest round of the survey was conducted between 28 September and 16 October 2009.

“There are hot spots of a recovery,” commented James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “However, until the labor market stabilizes and returns to growth in the U.S, spending will continue to be restrained.”

Nielsen Economic Current Key Indicators
Country	Trend	Jun-09	Jul-09
Brazil		2	2
Canada		3	3
China		2	2
France		3	3
Germany		3	3
Hong Kong		2	2
India		1	1
Italy		3	4
Spain		3	3
Taiwan		4	3
United Kingdom		2	2
United States		3	3
Source: The Nielsen Company 1=Very Strong Growth >/= +5%; 2 = Growth between +1 and +4%; 3 =Neutral Between -1 and +1%; 4 =Negative between -1 and -4%; 5 = Very Negative

As expected, the strongest growth continues to come from the emerging economies of Brazil, China, Hong Kong and India – although all remained unchanged from the previous month. While Taiwan is the only country that showed a measurable gain this month, it essentially remained flat as it was the only country that declined last month. Of note in Brazil, interest rates and unemployment rates are falling with the expansion of industrial activity, and there are signs of recovery in food product categories and non-basic product categories. In Hong Kong, previous growth in household categories due to the H1N1 “swine flu” virus has been slowing, but baby products continue to be the most lucrative category demonstrating the fastest growth.

In North America, Canada continues to outpace the U.S. as evidenced by gains in dollar sales and promotional activity, while in the U.S., frequency of shopper trips and transaction size continued to slow despite aggressive price reductions as consumers remained cautious about the outlook.

Western Europe also remains mired in a prolonged period of sluggishness. However, promotional activity appears to be having a positive effect on sales with the exception of Italy, the only country showing a significant decline this month, where coincidentally, promotional activity also dropped. France saw continued growth in value channels, while unit and dollar sales in Germany remained moderate, and in the UK, there was improvement in volume sales and premium store brands.

Download the latest Nielsen Economic Current.

In the U.S., consumers remain skittish.  Shifts to private label brands continued at a strong pace, as they have for the last eight months, while consumers are shopping less frequently and spending less per trip.  Canadians, on the other hand, are spending more per trip, and are taking advantage of retail promotions.  Unlike in the U.S., private label brands are struggling to gain share as national brands step up promotional activity.

In Europe, the French remain relatively unchanged in their shopping.  Value channels continued to see growth and more retailers were selling on promotion, leading to a modest increase in the amount spent per trip.  Germans showed very little change in the number of shopping trips they took, nor did they increase or decrease how much they spent.  Unit sales increased, however.  In the UK, sales volume improved slightly from the previous month, while budget store brands’ growth slowed as consumers began returning to premium brands.  British shoppers were also spending slightly more per trip.  Italians continued to move to store brands and value channels, although they were reducing their shopping frequency.  Spaniards, who have been among the most optimistic, have not seen that reflected in spending.

Brazilians showed an 8 point surge in optimism, and this translated into more frequent shopping trips and higher sales, in both volume and value terms.  Hong Kong and China both showed growth in sales, but Taiwan showed declines, and optimism there was among the lowest in Asia.  Indian consumers’ confidence was high, and volume and value sales both increased by more than 5 percent.

“While things are starting to look up, it’s clear that Americans and Western Europeans aren’t quite convinced that recovery has taken hold and remain cautious when it comes to shopping.  The labor market is clearly affecting this behavior.  It comes as little surprise that Brazil, India and China – countries that have generally been less affected by the global recession – are among the first to see renewed consumer confidence and sales growth,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.

The Buzz

While the idea of recovery hasn’t opened up global consumers’ wallets quite yet, it has started to infiltrate their discussions on the Web.  In June, 71 percent of survey respondents thought that their countries were in recession, an improvement from the 77 percent who thought the same in April.  Additionally, 26 percent believed that their country will be out of a recession in the next twelve months, up three points from April.  Global recession buzz has declined 27 percent since March.  In July, however recessionary buzz perked up, primarily in Western Europe.

“We are likely to see an overall downward trend in recession discussions, but it will be choppy until consumers really feel as if they are experiencing the recovery,” said Russo.

Download the latest Nielsen Economic Current.

A Link Between Buzz And Spending

For the latest Economic Current, Nielsen tracked online discussions about the economy and found that since mid-March 2009, recession buzz has dropped 47 percent in the U.S., UK, Germany, Italy, Spain, Australia and New Zealand.

“Globally, Nielsen is tracking online discussions related to the recession and when the recovery may emerge. While discussions about the recovery are still quite low, we have seen that the public is talking less about the recession — often dramatically less,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company.

“In the U.S., we found that recession discussions have dropped since hitting a peak in January.  There appears to be a strong correlation between what consumers are saying in discussion groups and their subsequent actual purchase behavior.  From the end of 2008 to March 2009, when recession discussions were highest, we found that sales actually declined by 2.3 percent.  From mid-March to early June, as recession chats dropped, we found that sales actually showed a modest increase,” continued Russo.  “This is an important dynamic as we look to signs of a sustained recovery, and Nielsen will be at the forefront of this research.”

Noteworthy Highlights

• After showing some positive movement in April, U.S. consumers pulled back on shopping and how much they spent per trip. Meanwhile, the shift to value channels such as supercenters, club and dollar stores continued, as did the move to private label store brands.
• Canadians are slightly more optimistic than their southern neighbors. While they aren’t shopping any more frequently than before, they are spending more per trip. But like Americans, Canadians are also turning to private label store brands and value channels.
• Western Europe remained in a neutral position. Some countries’ consumers shifted to value channels and store brands, but they generally reduced the frequency of their shopping trips and spent no more, or in some cases, less than in previous months.
• Brazilians were the most positive of the lot, with consumers shopping more frequently.

Download the latest Nielsen Economic Current.

“Although consumers are still not shopping as frequently, we are seeing a turnaround in spending as shoppers spend more money per trip,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company. “There continues to be the emergence of optimism worldwide, and this upward trend in spending across four leading economies is further evidence that the ‘green shoots’ of economic recovery are finally breaking through. We expect to see even more forward momentum as we look to the second half of 2009.”

Noteworthy Trends

• Scores of six out of 10 GDP countries remained flat from the previous month and no country declined for the first time in four months, hopeful signs that the global economy is stabilizing as consumer confidence cautiously begins to turn up.
• The United States’ score saw a strong rebound from declines in March, up to a 2 (growth of 1% to 4%) from a 5 (as much as 4% decline). The lift is further evidence that the U.S. consumer market may have bottomed out and we will start to see modest gains in spending going forward. (Seasonality is partially a factor due to Easter falling in March last year and April this year.) While consumers are spending more money per shopping trip, they are still shopping cautiously, shifting to value channels like Target and Costco, and to private label store brands.
• India held steady, while China strengthened its score considerably, moving to a 1 (up to 5% growth) from a 3 (flat growth), a result of a massive stimulus and strong dollar and unit sales growth. This is a particularly hopeful sign given that China and India are best positioned, as the world’s leading economies, to be the leaders in a global recovery, based on export and domestic goods demand.
• Canada continued to show moderate levels of consumer spending growth, with a score of 1 (up to 5%), up from 2 (growth of 1% to 4%). Data this month shows that Canadian shoppers are spending more money per trip, possibly a result of retailers running more promotional sales to entice shoppers to stock up on goods.
• Western Europe remains in a neutral position, not showing significant fluctuations in consumer activity. Despite rising unemployment, the vast majority of consumers have regular income, which means that many are saving more.

Download the latest Nielsen Economic Current.

Download the Nielsen Economic Current media release.