South African consumers have been so badly battered by images of continuous unrest along with ever present fears of failing electricity supply that it will take more than that to erode their confidence further, the FNB and Bureau for Economic Research consumer confidence index (CCI) showed yesterday.
Eskom declared two power supply emergencies in January followed by the roll-out of load shedding on March 6, a phenomenon last seen in 2008, but the CCI improved one notch to minus 6 index points in the first quarter.
The index, now at comparable levels to those prevailing in the second quarter of 2008 when Eskom first rolled out load shedding, remained depressed but showed an improvement from the decade low of minus 8 recorded in the third quarter of last year and minus 7 in the fourth quarter.
FNB chief economist Sizwe Nxedlana said the level of the CCI showed that sentiment was still worryingly negative and should not be read as indicating any resilience. However, the uptick indicated that the economy had become more accustomed to unrest and it was starting to have a numbing effect on consumers’ confidence.
“To see a significant decline from where we are, we have to see things that are much worse than we are seeing now. Since the second half of 2012, South Africa has had unrest all the time. There is a risk of the confidence further declining, but the strike activity in the magnitude seen in the past two-and-a-half years doesn’t pose that risk,” he said.
More consumers were expecting that it could only go up from here, with the percentage of those expecting South Africa’s economic situation to worsen in the next 12 months decreasing. The CCI’s economic outlook sub-index improved by three index points to minus 9.
Consumers’ confidence in their own financial prospects remained unchanged at 8 index points. High-income earners had a high level of confidence in this regard and since they accounted for a bigger share of spending power among South African consumers, FNB expected consumer spending to remain soft in the first half of this year instead of showing any decline.
However, spending on durable goods should continue to fall as consumers’ rating of the appropriateness of the present time to buy durable goods slumped from minus 14 to minus 17, the lowest level since the 2009 recession. – Business Report