Consumer confidence surprises

Consumer confidence increased by four index points - from +18 during the third quarter of 2007 to +22 during 2007's fourth quarter.

The CCI is now just below the all-time high of +23 reached during the first quarter of 2007.

"The 2007 fourth quarter rebound in consumer confidence comes as a bit of a surprise given the adverse developments - such as rising interest rates, slowing house price increases, higher inflation and tighter credit standards following the introduction of the new National Credit Act," Cees Bruggemans, chief economist of FNB said.

He, however, pointed to generous salary increases, increased employment and, possibly, the conviction amongst consumers that the rate hike threats and higher inflation would be be transitory "and only affect other people".

Compared with the previous survey, more (on a net basis) consumers now expected the economy to improve during the next 12 months, their own finances to improve during the next 12 months and they rated the present the right time to buy durable goods, Bruggemans said.

The confidence of white consumers increased by 3 index points to +6 and that of black consumers by 5 index points to +30 during ther fourth quarter of 2007.

"The current sustained high overall confidence level stems mainly from black consumers, whose confidence has now risen uninterruptedly for three years - from +21 during the first quarter of 2005 to +30 during the fourth quarter of 2007," said Bruggemans.

The confidence of white consumers had been more volatile and declined in mid-2006 from a level of around +13 to one of +6 currently, he said.

The fieldwork of the 2007 fourth quarter consumer confidence survey took place between 8 and 22 October 2007 and 2,458 adults were interviewed.

- Sapa