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Consumers are fairly optimistic that the outlook of the SA economy and their household finances will improve over the next 12 months, the FNB/BER Consumer Index has revealed.
Consumers are fairly optimistic that the outlook of the SA economy and their household finances will improve over the next 12 months, the FNB/BER Consumer Index has revealed.

Consumers optimistic about SA economy, household finances

ECONOMIC NEWS

By Lameez Omarjee - Jan 29th, 14:51

Consumers are fairly optimistic that the outlook of the SA economy and their household finances will improve over the next 12 months, the FNB/BER Consumer Index has revealed.
 

The index for the fourth quarter of 2018, released on Thursday, held steady at +7. The index had fallen sharply from +22 recorded in the second quarter to +7 in the third quarter.

The index surveys between 2 000 to 2 500 adults on their attitudes and expectations on the economy and household spending on a quarterly basis.

"Consumer sentiment settled at a much lower level during the second half of 2018 compared to the extraordinarily positive numbers booked at the height of Ramaphoria (between +22 and +26 in the first half of 2018)," FNB Chief economist Mamello Matikinca-Ngwenya said in the report.

"Consumer confidence remains far higher compared to the depressed levels recorded between 2015 and 2017," she added.

Despite consumer optimism about a recovery in the economy and improved household finances, consumers do not feel the time is appropriate to buy durable goods.

"Durable goods such as furniture and household appliances were one of the best performing retail sales categories during 2018," Matikinca-Ngwena said.

But a hike in the prime interest rate in November 2018 and a depreciation in the rand exchange rate since March 2018 will "adversely" affect the affordability of durable goods in 2019, she explained.

"The deterioration in consumers’ rating of the appropriateness of the present time to buy durable goods signals that furniture and household appliance sales growth could ease off from the sturdy rates recorded in 2018."

Going forward, there may be some relief for consumers given the declines in fuel prices in December and January, Matikinca-Ngwenya noted.

"The price of unleaded petrol declined by a hefty R3.07 between November 2018 and January 2019 and should bolster the purchasing power of consumers, with sales of non-durable goods and semi-durable goods in particular expected to benefit," she said.

Given that the SA economy exited a technical recession in the third quarter of 2018, the recovery is expected to continue in 2019. However, pressures such as load shedding and a possible downgrade to junk status by ratings agency Moody's, the pace of the recovery may be subdued.

"It is unlikely that either job creation, wage growth, overtime, commissions and bonus payments or credit growth will improve meaningfully during the first half of 2019," Matikinca-Ngwenya said.
Fin 24 

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