Consumers upbeat but insecure

Johannesburg - South African consumers are optimistic about the economy but not that positive about their own economic security, according to the consumer confidence index (CCI) for the second quarter of the year.

The CCI is compiled by FNB and the Bureau of Economic Research. The reading for the second quarter was virtually unchanged at 14 points, from 15 in the first.

The economic outlook confidence rose from 23 points in the first quarter to 27 in the second. This shows that more consumers now expect the economic performance to improve over the next 12 months.

"The imminence of the 2010 FIFA World Cup and its growing crescendo probably is part of the explanation why the second quarter of 2010 saw the economic [outlook] confidence lift another notch, " said FNB chief economist Cees Bruggemans.

Bruggemans added that consumer sentiment towards buying durable goods has improved. "Credit uptake is proceeding very slowly, with mortgage lending growing by barely 4% annually," he said.

Bruggemans said consumers prefer to repay debt where employment and income levels allow them to do so.

Further, many South Africans don't have additional sources of income such as bonuses, dividend payouts and rental income at the moment. Many have also lost jobs and businesses, compounding financial pressure.

"There is quite a deep duality out there today," said Bruggemans. Those who are in the clear are generally doing very well, but "those who lost out are far too numerous not to be a force".

Additional factors weighing down consumers include renewed uncertainty around the banking sector, following various crises in Europe and impact of political developments in South Africa.

 - Fin24.com