Fin24

Consumer confidence edges up

2011-06-21 13:18

Johannesburg - Consumer confidence is up slightly in the second quarter of 2011 with black consumers particularly confident, according to the First National Bank/Bureau for Economic Research consumer confidence index released on Tuesday.

The index rose from 9 in the first quarter of 2011 to 11 in the second quarter, said FNB chief economist Cees Bruggemans.

This was still less than the 14 which prevailed throughout 2010.

"A reading of 11 indicates that a comfortable majority of consumers are satisfied with current conditions and expect these to persist over the next 12 months," Bruggemans said.

Bruggemans said black consumers - Sotho and Nguni speakers in particular - showed "overwhelming confidence".

"These urban groupings show average majorities of 18 (suggesting 60/40 splits in favour of confidence), high by historic standards and more reminiscent of the late stages of expansionary upswings rather than the early phase (as the case today)."

He said minorities, however, were "more coy" although "mostly still helpful in sustaining the overall majority of confidence, especially when asked about their own financial prospects".

White consumers show only a small confident majority of 2.

English speakers of all kinds registered -1, and Afrikaans speakers of all kinds -2.

Bruggemans said it was not clear why there was this discrepancy between black and white consumers.

"We can only speculate about the reasons. Successful black urbanites are favoured by financial and economic trends. They retain high confidence in government (going by election results) and sizeable majorities believe the economy has good prospects." he said.

"White consumers clearly have far less trust in the economy's prospects, possibly also reflecting their political views.

"Yet together, along with coloured and Indian consumers, they show comfortable majorities of confidence closely mirroring consumer spending trends."

The index combines the results of three questions posed to 2 500 predominantly urban adults between May 18 and June 6, 2011, namely the expected performance of the economy, the expected financial situation of households and the rating of the appropriateness of the present time to buy durable goods, such as furniture, appliances and electronic equipment.

Consumers were more optimistic about the economy's prospects over the next 12 months compared to the previous survey, with the economic index increasing by four points to 17.

They were also optimistic about an improvement in their own finances in the next 12 months. The household financial position index increased by two points to 22.

However, fewer consumers expected an improvement in South Africa's economic performance, with the index at 17.

The only index that declined, albeit marginally, was that for the time to buy durable goods, which dropped to -5 from -4.

This reading "indicates that slightly more consumers continued to rate the present time as unsuitable for buying durable goods, compared to the percentage rating it as the right time".

Bruggemans said this "prudent" attitude towards spending on durable goods could be due to an awareness of a looming interest rates hike and difficulty in obtaining credit.

Also, the replacement cycle was starting to normalise, he said.

"The urgency to buy certain big ticket items has declined because the most important ones were replaced last year. Many people, for example, upgraded their television sets before the World Cup Soccer tournament last year."