Consumers downbeat about SA economy

Johannesburg - Consumer confidence declined during the fourth quarter of 2012, First National Bank and the Bureau for Economic Research's Consumer Confidence Index (CCI) reported on Tuesday.

It declined by two index points from -1 to -3.

This meant consumers' rating of the outlook for the national economy and whether this was the right time to buy durable goods, had notably deteriorated during the fourth quarter.

However, consumers' rating of their own financial prospects remained largely unchanged.

Ratings were at levels last witnessed at the onset of the global financial crisis in the second half of 2008. "With the average reading for the CCI at +6 since 1994, the latest reading of -3 implies that consumer confidence is low and not supportive of strong growth in consumer spending," the organisations said.

It was at a high of +15 when South Africa hosted the Soccer World Cup, and had already touched -3 this year during an "alarming escalation" in the eurozone debt crisis.

They said that coupled with rising inflation and a deterioration in the outlook for household income growth, low consumer confidence levels foreshadowed subdued growth in household consumption expenditure during 2013.

The CCI combines the results of three questions posed to adults in South Africa between October 24 and November 9 2012. The latest was done before the De Doorns farmworkers' strike.

Respondents were asked about the expected performance of the economy, the expected financial position of households, and the rating of the appropriateness of the present time to buy durable goods, such as furniture, appliances and electronic equipment.

"Given the adverse implications of the violent strikes in the mining, transport and now also agricultural sectors for fixed investment and job creation in South Africa, it is not surprising that consumers are becoming increasingly concerned about the outlook for the domestic economy," said Cees Bruggemans, FNB consulting economist.

"The decline in the index since the beginning of the year indicates that consumers are becoming more cautious about purchasing durable goods, which correlates with the deceleration in sales growth reported by retailers in furniture and household appliances since the end of 2011," he said.

The conclusion drawn from the study was that "economic conditions in the eurozone remain tenuous, while the escalation in domestic political tensions and spate of violent wildcat strikes have dented South Africa's fixed investment and general economic growth prospects".