Consumer confidence reaches lowest level since 4th quarter of 2017
JOHANNESBURG – South Africa’s consumer confidence index has dipped to -7 index points in the third quarter of 2019, the lowest since the fourth quarter of 2017 as Ramaphoria waned and the unemployment rate crept up to more than 29 percent.
Data from the FNB/BER Consumer Confidence Index released yesterday showed the latest reading of -7 index points is the lowest since the fourth quarter of 2017 (-8) and well below the long-run average reading for the CCI (of +2 since 1994).
The report said consumer sentiment rocketed to a historic high of +26 at the height of Ramaphoria in the first quarter of 2018, buoyed by euphoria at President Cyril Ramaphosa’s ascendency to power, but then started to back-pedal shortly afterwards.
However, for four consecutive quarters, from the third quarter of 2018 to the second quarter of 2019, consumer sentiment remained within a fairly tight (yet positive) range of +2 and +7 index points, before capitulating during the third quarter of 2019.
Siphamandla Mkhwanazi, FNB economist: property and consumer economics, said: “Consumer sentiment deteriorated significantly across all income groups, but especially so among high-income consumers. High-income consumers, earning more than R14 000 a month, not only turned pessimistic about the outlook for the economy and the appropriateness of the present time to buy durable goods, but they are also becoming increasingly concerned about the outlook for their own household finances.
“A confluence of adverse economic developments in all likelihood contributed to the slump in consumer sentiment, including rapidly rising unemployment, declining real per capita incomes, news of a further massive R59 billion government bailout to Eskom, and an upsurge in xenophobic violence in South Africa.”
According to the index, the data dovetails with the RMB/BER business confidence index, which sank to a 20-year low of 21 index points, from 28 points in the second quarter.
Retailer confidence took a broadside in the third quarter, with 83 percent of retailers surveyed saying they were dissatisfied with business conditions during the third quarter, up from 72 percent in the second quarter.