The impact of sectoral confidence indices on the consumer confidence index: The case of Turkey

This study analyzes the relationships between the consumer confidence index and the confidence indices of the real sector (manufacturing industry), construction, retail trade, and services sectors, using monthly data from the 2011:01–2024:01 period. The stationarity levels of the series were determined by the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests. Structural breaks were taken into account using the Bai-Perron Structural Break Test. Subsequently, symmetric effects were analyzed with the linear Autoregressive Distributed Lag (ARDL) model, and asymmetric effects were analyzed with the nonlinear ARDL (NARDL) model. According to the findings of the study, long-run relationships exist between the consumer confidence index and sectoral confidence indices. Changes in the manufacturing sector confidence index produce symmetric and same-direction effects on the consumer confidence index in the short run, while in the long run, despite the presence of asymmetric effects, no definitive conclusions can be drawn about the direction and magnitude of the effects due to the insignificance of the coefficients. Positive and negative shocks in the trade sector confidence index generate significant asymmetric responses on the consumer confidence index in both the short and long run; short-run instantaneous declines move in the same direction, lagged effects in the opposite direction, and long-run effects in the same direction and with a stronger magnitude. In the services sector confidence index, short-run instantaneous changes are symmetric and same-directional, lagged effects are in the opposite direction, and although long-run asymmetric effects exist, the coefficients are insignificant. In the construction sector confidence index, symmetric and same-direction effects are observed in the short run, while in the long run, significant asymmetric effects occur, with negative shocks exerting a stronger impact than positive shocks. In light of these findings, several policy recommendations are provided to balance the effects of sectoral confidence on consumer perceptions. It is considered that encouraging technology-oriented investments and developing financial instruments that can contribute to cost stability may be beneficial for strengthening confidence in the manufacturing sector. Regarding the trade sector, the adoption of micro-level regulatory and supportive mechanisms aimed at ensuring demand supply-based market stability is suggested. In the services sector, prioritizing transparency and standardization practices to enhance service quality is recommended to reduce short-term fluctuations and limit long-term uncertainties. In the construction sector, facilitating access to financing, conducting comprehensive risk analyses, and strengthening early warning mechanisms are anticipated to help mitigate the impacts of negative shocks on consumer confidence. Finally, it has been observed that the structural breaks in 2018 and 2021 have created lasting effects on consumer confidence with different dynamics; notably, the 2021 shock exerted a pronounced and powerful pressure.