FNB/BER conducted the fieldwork for the fourth-quarter survey was conducted between October 28 and December 4, 2017 - before the ANC National Conference took place in which Cyril Ramaphosa was elected as the new president of the ANC.
Jason Muscat, a senior economic analyst at FNB, said household credit extension also seemed to have turned the corner, with growth picking up gradually from very low levels since the middle of 2017.
“The current optimism around the election of Mr Ramaphosa could move the needle on consumers’ rating of the present time to buy durable goods in a positive direction. “Coupled with a sustained recovery in credit extension and lower prices for imported durable goods on the back of the stronger rand, the outlook for durable goods sales volumes, in particular, have improved,” Muscat said.
The -8index points in the fourth quarter was a marginal improvement from the -9 index points recorded during the second quarter.
No survey was conducted during the third quarter.
A breakdown of the survey results per household income group shows that the financial outlook index for low-income households plunged from -2 to -13 index points, the lowest reading in two-and-a-half years.
The financial outlook index for middle-income households edged one index point lower to +4, but that of the high-income group improved from +12 to +16 index points.
Annabel Bishop, the chief economist at Investec, said consumers would gain from the savings from a fall in the petrol price, supporting retail sales growth and limiting the ascent of inflation as purchasing power was bolstered.
“Consumer and business confidence was suppressed last year, but substantial political and policy certainty will likely feed through into the 2018 confidence measures, lifting investment, expenditure and GDP growth,” Bishop said.
In January, the Nielsen South African CCI for the third quarter of 2017 reflected a 5point increase from the previous quarter to 83points, the highest level since the third quarter of 2016.
Nielsen said the small improvement was on the back of an improvement in job prospect and personal finance outlook for this year.
Muscat said the bleak outlook for government finances remained one of the greatest risks to consumer spending in 2018.
“With a revenue shortfall of R50billion projected in the MTBPS and government debt now expected to reach 60percent of GDP by 2020, we expect further substantial increases in personal income taxes and indirect taxes, as well as cuts in government spending in the February budget.”
- BUSINESS REPORT