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Johannesburg - The increase in consumer confidence during the second quarter of 2014 is encouraging and points to some resilience in the consumer sector in the face of considerable headwinds, according to Sizwe Nxedlana, chief economist of FNB.
The FNB/BER consumer confidence index (CCI) rebounded from -6 to +4 index points during the second quarter of 2014.
The latest reading is the highest since the third quarter of 2011, but still marginally below the long-term average reading of the CCI, which was +5 since 1994.
An analysis of the survey results by household income and population group points to a fairly broad based improvement in consumer confidence levels during the second quarter.
The rebound in the CCI suggests that consumers expect economic growth and their household finances to improve over the next 12 months from the current depressed levels, said Nxedlana.
“Furthermore, to the extent that the outcome of the May election contributed to the jump in the CCI, consumer confidence may well retract in upcoming quarters as the political excitement wanes and economic realities sink in,” he said.
"The uptick in the CCI suggests an increased willingness to spend, particularly among high income consumers.”
However, consumers' ability to spend - as determined by their disposable income and access to credit - also needs to improve for the rise in confidence levels to translate into a meaningful acceleration in household consumption expenditure.
"Factors such as high fuel prices, rising food inflation, debilitating industrial action, anaemic job creation, higher interest rates and slower growth in government spending are expected to prevent the growth in real consumer spending from improving much beyond its current modest pace of 2% year on year during the second half of 2014,” he said.
The jump in the CCI mirrors the increase in the BER's retailer confidence index during the second quarter of 2014.
It reinforces the view that the slowdown in household spending has not been as dramatic compared to the recent deterioration in overall economic growth in South Africa.
- Fin24
The FNB/BER consumer confidence index (CCI) rebounded from -6 to +4 index points during the second quarter of 2014.
The latest reading is the highest since the third quarter of 2011, but still marginally below the long-term average reading of the CCI, which was +5 since 1994.
An analysis of the survey results by household income and population group points to a fairly broad based improvement in consumer confidence levels during the second quarter.
The rebound in the CCI suggests that consumers expect economic growth and their household finances to improve over the next 12 months from the current depressed levels, said Nxedlana.
“Furthermore, to the extent that the outcome of the May election contributed to the jump in the CCI, consumer confidence may well retract in upcoming quarters as the political excitement wanes and economic realities sink in,” he said.
"The uptick in the CCI suggests an increased willingness to spend, particularly among high income consumers.”
However, consumers' ability to spend - as determined by their disposable income and access to credit - also needs to improve for the rise in confidence levels to translate into a meaningful acceleration in household consumption expenditure.
"Factors such as high fuel prices, rising food inflation, debilitating industrial action, anaemic job creation, higher interest rates and slower growth in government spending are expected to prevent the growth in real consumer spending from improving much beyond its current modest pace of 2% year on year during the second half of 2014,” he said.
The jump in the CCI mirrors the increase in the BER's retailer confidence index during the second quarter of 2014.
It reinforces the view that the slowdown in household spending has not been as dramatic compared to the recent deterioration in overall economic growth in South Africa.
- Fin24
