With the imminent release of 2017’s first
quarter consumer confidence figures, it is important to note that much of the
current political and subsequent economic uncertainty has not yet reflected in this
data. It would serve us well to consider how the second quarter’s figure may be
affected as political risks sink in, particularly since this indicator took a
dive in the final quarter of 2016.
South Africa’s Consumer Confidence Index
(CCI) dropped to -10 in December for the fourth quarter of 2016, from a
previous -3, with households citing concerns about the economy. In light of
recent political upheaval, the outlook for the economy will almost certainly
remain weak, if not deteriorate even further in the eyes of consumers.
Another factor that impacts consumer
confidence is the inflation rate. Despite the inflation rate cooling down to
6.3% in February after peaking in December at 6.8%, the recent downgrades by
ratings agencies could bode ill for our inflation rate and will likely reflect
in decreased consumer confidence going forward.
The latest inflation figures for March are
important economic announcements due this week:
- Euro Area:
Consumer Confidence Flash
- US: Philly Fed
Manufacturing Index and Unemployment Change
- Euro Area: Purchasing
Manager’s Index (PMI)
- Great Britain:
- US: Existing
Giacomo Bonavera is head of foreign exchange trading
at Capilis Asset Managers. Click here to
visit the firm’s website.