The FNB/BER consumer confidence index, which was released today, remained essentially unchanged in Q2 2010 at +14 versus +15 in Q1 2010. Although confidence levels moved sideways, the overall level of confidence remains well above the long-term (25 years) average of a mere 1.7 index points, suggesting that confidence is solid.
The sideways move in confidence is a little surprising given the close proximity of the Soccer World Cup to when the survey was undertaken as well as the fact that domestic interest rates were cut, surprisingly, in March 2010. Both these factors should have boosted confidence. According to the BER, consumers remain very concerned about the poor employment conditions, as well as the state of their personal finances in the sense that they are, relatively, unwilling to increase debt to purchase large ticket items. It is therefore possible that consumers are feeling good about the general economic/sporting environment but don’t fell that same level of confidence in relation to their personal finances.
The political environment, increased strike activity and general lack of service could also have had a dampening impact.
Over the past year confidence levels amongst all income groups, race, age and language groups have generally improved (see charts attached). Importantly, there is a reasonably close (but lagged) relationship between consumer spending and consumer confidence, which points to some (modest ongoing) improvement in consumer activity during 2010, off a very low base.
The FNB/BER consumer confidence index is derived from 2 500 personal at-home interviews. The surveys cover all demographics in metropolitan areas, cities, towns and villages throughout South Africa. The consumer confidence index reveals the change in consumers’ expectations. The index has fluctuated between -36 (indicating an extreme lack of confidence) and +23 (indicating extreme confidence).
Download the presentation slides