Wednesday 17 March 2010

SA consumers expect better times ahead





During 1Q2010 the FNB/BER Consumer Confidence Index rose by a further 9 index points to a level of +15 which is the single biggest increase between two consecutive quarters in five years. Furthermore, the CCI is now at a slightly higher level compared to the one that prevailed before it plunged 2 years ago. However, the current level of +15 is lower than the levels of +20 and above prevalent during 2006 and 2007.

The FNB/BER CCI is based on three questions, namely the expected performance of the economy, the expected financial situation of households and the rating of the appropriateness of the present time to buy durable goods (such as furniture, appliances, electronic equipment and motor vehicles).

In terms of the components of the FNB/BER CCI, the 1Q2010 increase was caused consumers expecting the economy and their own finances to improve during the next 12 months, as well as fewer rating the present as an inappropriate time to buy durable goods compared to the 4Q2009 survey.

The substantial improvement in consumers' willingness to buy durable goods is impressive. However, this rise needs to be put in perspective, consumers remained cautious relative to the heydays of 2006 and 2007. In contrast, consumers' optimism about improvements in the economic performance and their own finances in 12 months' time is currently close to the high points of 2006 and 2007.

Source: FNB, Cees Bruggemans, chief economist

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