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Johannesburg - The confidence level of the top income market is expected to be hit over the next few months as the drop in disposable income starts to chew into pockets.
"The confidence of the top end of the market [will take] a knock. Sales to this group face more difficult times, as it has become less willing to buy than previously," said FNB chief economist Cees Bruggemans in a statement.
His comments followed the release of the First National Bank (FNB)/Bureau for Economic Research (BER) consumer confidence index (CCI) on Tuesday, which showed a decline of three index points from -1 during the third quarter of 2008 to -4 during the fourth quarter of 2008.
"A reading of -4 indicates that there are currently more pessimists than optimists," he said.
Bruggemans said that financial market turmoil reduced confidence in the economy's ability to perform well in the high-income group (those who earn more than R5 000 a month). It also curbed expectancy of further significant improvement in their own financial positions among the very high-income group (those who earn more than R10 000 a month).
"Plunging share prices, the falling rand and the slump in house prices may have weighed down the confidence of the very high-income earners," said Bruggemans.
Conversely, he also said that the fall in the petrol price, the stable interest rate and a loss of momentum in food price increases supported the confidence of consumers with monthly household incomes of less than R10 000.
"However, the economic slowdown and weaker profits put the future wage increases and continued employment of this group at risk. Cutbacks in private sector employment will hurt the confidence of this group in particular."
According to the survey, the majority of consumers continue rating the present as an inappropriate time to buy durable goods.
-Fin24.com
The FNB/BER CCI combines the responses of a representative sample of adults to three questions: the expected performance of the economy during the next 12 months, the expected change in household finances during the next 12 months and the suitability of the present time to buy durable goods such as household furniture and appliances.