SA consumers hit rock bottom

Johannesburg - The findings of the MasterCard Worldwide Index of Consumer Confidence for South Africa point to the lowest consumer confidence levels recorded since 2004.

In January 2010 the index fell to 59.8 points, down from 67.3 six months ago and 78.7 a year ago.

The index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. It is based on a survey which measures consumer confidence based on expectations over the next six months of the economy, employment, stock market, regular income and quality of life.

According to Roelof Botha, and independent economic adviser, the decline in the score to its lowest level since inception is not surprising when viewed against the background of South Africa's recent recession.

"Although the country managed to return to positive real GDP[gross domestic product] growth in the third quarter of 2009, it will take at least another quarter for some sectors of economic activity to fully recover," he said.

Anthony West, general manager of MasterCard Worldwide's Africa business, said with about a million jobs lost in SA over the past year and the SA National Treasury announcing a budget deficit of 7.6% of GDP in the 2009/10 fiscal year, consumers and businesses seem to have been hit harder by the global economic turmoil than first anticipated.

However, even though SA's score fell year-on-year and from the score rated in July 2009, the sub-indices were still slightly positive with expectations of regular income being the highest (66.8), followed by stock market expectations, economy and quality of life.

Jozi more upbeat than Durbs

The stock market indicator saw a big rise from 53.7 in the second half of 2009 to 62.6 in 2010.

Botha explained that the increase in the stock market indicator is closely correlated to trends in the JSE's All-share index. "The percentage improvement in the indicator over the past six months amounts to 17%, compared to increase in the JSE Alsi of 13% and 22% during the three months and the six months preceding the month of the survey, respectively," he said.

Employment came in 3.7 points over the neutral level.

The survey also shows in what it described as "an interesting turn of events" that Johannesburg has ousted Durban as South Africa's most confident city, with a positive score of 70.6. Durban's score has plummeted 39.2 points to 50.4, while Cape Town experienced a decline of 9.6 points to 57.1.

Botha said that a plausible explanation for the divergence between the three cities covered by the survey is the toll that the recent recession has taken on tourism.

Foreign visitors and Gauteng residents contribute significantly to both Durban and Cape Town's tourism sectors.

In Africa, Nigeria is by far the most optimistic market surveyed, coming in with a score of 89.4, while Kenya's score is pessimistic at 47.9.

- Fin24.com