Johannesburg - Consumer confidence remained virtually unchanged in the third quarter of 2010, according to the latest FNB/BER (Bureau for Economic Research) Consumer Confidence Index released Monday.
The Index (CCI) added one index point from 14 to 15 in the third quarter after posting a strong gain from 6 in the fourth quarter of 2009 to 15 in the first quarter of this year.
The level of consumer confidence stuck to the same relatively high level reached shortly before the sharp fall in 2008, FNB said.
"At +15, the FNB/BER CCI is still slightly below the exceptional high levels of +20 and above recorded during the heydays in 2006 and 2007 but is on a par with 1994, 1988 and 1980 cyclical peaks," FNB/BER said in a statement.
The index reacted in a major way by surging a hefty 27 index points in the fourth quarter of 2004 when South Africa won the bid to host the World Cup Soccer spectacle.
The recent 50-basis point interest rate cut is expected to reflect in the fourth quarter consumer confidence index. The 50-basis point rate cut in March helped keep consumer confidence higher in the second quarter of 2010.
The CCI combines the results of three questions posed to 2,500 mainly urban adults between 6 and 18 August on aspects such as the expected performance of the economy, expected financial situation of households and the rating of the appropriateness of the present time to buy big ticket items such as furniture and motor vehicles.
The index shows that similar to the first half of this year, consumers remained optimistic about the 12-month prospects for the economy as a whole. It recorded a reading of +23. Consumers also remained optimistic about their own finances, which came in at +25. They however remained somewhat hesitant to commit themselves on a large scale to purchase big-ticket items.
This aspect registered –4.
One of the most noteworthy results of the third quarter 2010 survey, the index said, was the noticeable improvement in high-income earners' willingness to buy durable goods. The time to buy durable goods index of high-income earners increased from –9 in the second quarter to +2 in the third quarter.
High income earners were became the first and only group to rate the present as the right time to buy durable goods.
FNB chief economist Cees Bruggemans said that several factors including the decline in the nominal interest rate to its lowest level in three decades and the anticipated rise in new vehicle prices after the introduction of the emission taxes possibly collectively persuaded high income earners.
There was a sharp rise in the confidence of white consumers, from +1 to +10 during the third quarter.
"Given that many white consumers also fall in the high-income group, part of the rise is explained by this group's increased willingness to buy durable goods," the statement said.
White consumers' rating of the present time to buy durable goods rose from –23 to –10 while their expectations about the economic performance and their own finances rebounded to about the same relatively high level as in the first quarter of 2010.
The confidence of English speakers remained steady at the same relatively high level compared to the first half of 2010 and that of Afrikaans speakers increased to such an extent that they are now on par with those of English speakers. The confidence of Afrikaans speakers increased from –5 to +4 in the third quarter.
The rise in the confidence of White consumers could probably be partly attributed to South Africa's successful hosting of the World Cup soccer tournament, the index said.
Consumer spending is expected to continue growing strongly in the near term on the back of rising incomes and a boost to real purchasing power.