Johannesburg - Consumer confidence slipped again in the second quarter of the year, dropping to negative 11, according to BER/FNB’s latest index.
The Consumer Confidence Index had edged up from negative 14 in the last quarter of 2015 to negative 9 in the first quarter of this tear.
FNB and BER also note that confidence levels are still below those seen during the economic crisis of 2008/9, when the lowest reading was negative 6.
This, they say in a joint statement issued on Tuesday, shows that “consumers are very concerned about the outlook for the domestic economy and their household finances”.
FNB and BER add the deterioration in consumer sentiment during the second quarter came on the back of a 6 index point relapse in consumers' rating of their own financial positions and a 3 index point slide in their rating of South Africa's economic prospects. The time to buy durable goods index edged up by 2 index points from the 6-and-a-half year low of negative reached in the first quarter.
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The statement adds that the field work for the latest survey was wrapped up before the explosion of violence in SA’s capital city of Tshwane, which was ignited by the ANC’s announcement of Thoko Didiza as its mayoral candidate and before the UK voted to leave the EU.
“These two factors increase uncertainty about South Africa's economic prospects and had the potential to suppress consumer confidence even more during the second half of June 2016.”
Sizwe Nxedlana, chief economist of FNB, says "a myriad of adverse economic forces had already been hammering the South African economy since 2015, including political uncertainty, social unrest, very low business confidence levels, a stagnation in public sector employment, a dramatic depreciation in the rand, soaring food prices and rising interest rates.
“These headwinds were exacerbated by the debilitating impact of the widespread drought on the agriculture sector and the effect of weak global demand and subdued commodity prices on the mining sector, culminating in a 1.2 per cent contraction in South Africa's real GDP during the first quarter of 2016."
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FNB also notes unemployment hit 26.7 percent in the first quarter. Yesterday, Stats SA said 15 000 jobs were lost in the first quarter.
“In light of the slump in economic activity and decline in employment levels, it is not surprising that consumers made a further downward adjustment to their ratings of the outlook for the South Africa economy and their household finances.”
The slump in consumer confidence was more pronounced among low income earners (less than R7 000 a month), which FNB/BER says this is attributed to sharp declines in their ratings of SA’s economic prospects, as well in their household finances.
The second quarter decline and exceedingly low level of the FNB/BER index mirrors the deterioration in the RMB/BER business confidence index during the second quarter, which dropped to its lowest level since the 2008/09 global financial crisis and recession.
"Unfortunately, given that inflation is set to accelerate further on the back of the drought-induced rise in domestic grain prices and sustained weak rand exchange rate, the purchasing power of most households will likely wane further in coming months,” notes Nxedlana.
IOL
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