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Johannesburg - Consumer confidence remains considerably higher compared to the very low CCI levels recorded during the second half of 2013 and in the first quarter of 2014, according to the latest FNB/BER consumer confidence index (CCI).
Following a strong rebound from -6 to +4 index points during the second quarter of 2014, CCI slipped back to a level of -1 in the third quarter of 2014.
The latest index number is, however, well below the long-term average reading of the CCI - +5 since 1994.
Consumers’ rating of the outlook for the national economy and their own household finances deteriorated compared to the relatively optimistic readings recorded in the second quarter of 2014.
Their rating of the appropriateness of the present time to buy durable goods - such as such as furniture, appliances and electronic equipment - improved for the second consecutive quarter.
"While a larger number of consumers areeager to purchase durable goods, it may take some time for household finances and access to credit to recover sufficiently, particularly for low and middle income consumers, to translate into a sustained improvement in furniture, household appliances, electronics and other durable goods sales," said Sizwe Nxedlana, chief economist of FNB.
The confidence levels of high income consumers remain notably higher compared to that of low income consumers, with affluent consumers being particularly optimistic about the outlook for their household finances.
The fact that the CCI did not revert back to earlier lows is heartening according to FNB and points to an improved willingness among consumers to spend relative to the same time a year ago.
Bolstered by a recovery in household income following the end of the platinum and engineering sector strikes, as well as lower petrol prices, consumers' ability to spend should also improve.
This suggests that the growth in real consumer spending probably bottomed during the second quarter of 2014, according to FNB.
Factors such as high food prices, slower growth in government spending, rising interest rates and sub-par growth in credit extension will, however, continue to constrain consumer spending during the first half of 2014.
National economy
During the third quarter of 2014, consumers’ rating of the outlook for the national economy and their own household finances both deteriorated compared to the relatively optimistic readings recorded in the second quarter of 2014.
While most consumers remained bearish about South Africa's economic prospects, they have become decidedly less pessimistic (with the index at -6 index points) compared to the same quarter of last year (-14 index points in the third quarter of 2013.
"The fact that the CCI did not revert back to the low levels recorded during the second half of 2013 and in the first quarter of 2014 is encouraging and points to an improved willingness among consumers to spend, particularly among the higher income groups," said Nxedlana.
"Bolstered by a recovery in household income following the end of the debilitating industrial action that plagued the economy during the first seven months of 2014, as well as lower petrol prices, consumers' ability to spend should also improve gradually in coming months."
He said although the growth in real consumer spending probably bottomed during the second quarter of 2014, factors such as high food prices, slower growth in government spending, rising interest rates and sub-par growth in credit extension will continue to weigh on consumer spending during the second half of 2014.
- Fin24
