Consumer confidence rebounds

Consumer confidence recovered in the second quarter of 2013, according to the quarterly FNB/BER Consumer Confidence Index (CCI) released on Wednesday.

 

"Having slumped from -3 index points during the fourth quarter of 2012 to a nine-year low of -7 in the first quarter of 2013, the FNB/BER CCI rebounded to +1 in second quarter of 2013," First National Bank said in a statement.

 

According to the latest index, consumers' rating of the outlook for the national economy, their own financial prospects, and the appropriateness of the present time to buy durable goods have improved.

 

However, the level of consumer confidence in the second quarter of 2013 was still well below the post apartheid average of +6 index points.

 

This signalled a significant moderation, but not a collapse in household spending, said FNB economist Sizwe Nxedlana.

 

"In order for the rise in consumer confidence levels to translate into a more permanent improvement in household consumption expenditure, there also needs to be a sustained recovery in real disposable income growth and household credit extension," he said.

 

Factors such as record high fuel prices, rising food inflation, muted job creation, and slower growth in government spending would likely continue to weigh on income and credit growth during the second half of 2013.

 

The increase in the CCI might therefore, in part, reflect a correction from an overly negative first quarter of 2013 result, he said.

 

"Economic conditions remained challenging during the second quarter of 2013, however, the worst case scenario has not transpired," Nxedlana said.

 

"Furthermore, the improvement in consumer confidence does correlate with better growth in retail sales and new vehicles and resilience in the labour market in recent months."

 

In the second quarter of 2013, consumers' rating of the prospects for their household finances and the appropriateness of the present time to buy durable goods each improved by nine index points, while the economic outlook sub-index of the CCI edged up by six index points.

 

Nxedlana said the absence of major power outages in recent months and the reprieve from large-scale violent strike action during the second quarter could have bolstered the confidence levels of consumers.

 

Although consumer confidence levels improved across the board during the second quarter of 2013, the rise was largely due to sentiment held by middle- and high-income consumers compared to people earning less than R2000 a month.

 

 

-Sapa