South African consumers still upbeat
Fin24.com - Sep 20th 2012, 08:18
Cape Town - South African consumers are maintaining an upbeat attitude, according to an index which shows consumer confidence has kept a positive year-on-year outlook.
The MasterCard Worldwide Index of Consumer Confidence released on Wednesday recorded an overall rise of two points in the country's consumer confidence to a score of 69.8, compared with the 67.8 recorded in 2011.
The highest increase in optimism, compared with the same period in 2011, came from the stock market indicator, which rose by 3.8 points from 62.9 to 66.7.
According to independent economist Dr Roelof Botha, South Africa is poised to benefit from high economic growth in sub-Saharan Africa, where a spate of large new mining and energy development projects are being implemented.
"Against this background, the consolidation phase of economic recovery, which has lasted for three years, is bound to progress towards a new growth range of around 4%."
The MasterCard index is based on a survey which measures consumer confidence on prevailing expectations in the market for the next six months based on five economic indicators: economy, employment, stock market, regular income and quality of life.
The score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
The survey involved 11 376 respondents aged 18 to 64 across 25 markets throughout the Asia Pacific, Middle East and Africa regions.
African countries surveyed were Egypt, Kenya, Morocco, Nigeria and South Africa.
Commenting on South Africa, Philip Panaino, division president, South Africa, MasterCard Worldwide, said: "The latest index results show an overall year-on-year increase in optimism with all five of the key indicators that make up the consumer confidence score recording increases.
"This indicates that South Africans are feeling encouragingly positive about the next six months."
The country's score, said Panaino, is in remarkable alignment with South African Reserve Bank statistics recording increases in household credit extension (6.8%), household consumption expenditure on semi-durables (6.3%), money supply (6.4%) and fixed capital formation (5.8%).
The index result for regular income yielded the highest overall result at 80.3, even though it went up by just 2.7 points in comparison to the same period in 2011.
According to Botha, higher dividends, combined with sustained increases in formal sector salaries, lie at the heart of the improvement in the regular income indicator.
The rise in expectations of regular income was mirrored by the increase seen in South Africans' expectations of their quality of life, which also rose by 2.7 points to a score of 70.
This marker usually has the closest aligned to the overall index score for a particular market, "as the state of the economy, employment opportunities and regular income all contribute to the ability of consumers to maintain or improve their standard of living", said Panaino.
There's good news for potential home owners. "Another key factor is also at play in the assessment of the quality of living conditions," said Botha.
"The relatively high level of optimism would have been influenced by a fairly sharp improvement in the affordability of mortgage financing. Home owners are now in a position to afford a mortgage loan that is virtually double the value of what they would have qualified for three years ago.
"This fortuitous development is as a result of a combination of a 36% increase in the country’s average nominal salary and a 39% decline in the prime overdraft rate since the first quarter of 2009," said Botha.
When asked if they expected their employment prospects to deteriorate, improve or remain the same in the coming six months, South Africans revealed their confidence in the job market with this indicator rising by 2.1 points to an optimistic result of 67.8.
The economy indicator rose marginally from 63.2 in 2011 to 64.2 in 2012.
"There's a current real GDP (gross domestic product) growth trajectory of close to 3%, an increase in total real household consumption expenditure and retail sales of 3.7% and 5%, respectively (over the past year) and a return to formal sector job creation, which are likely contributors to the increase in confidence in the economy," said Botha.
"It's encouraging that South African consumer sentiment for the next six months is positive.
"However, the South African consumer confidence level is still off its historical peak of 91.1 points in the second half of 2006, and is below South Africa's historical average of 71.3 since the survey was first conducted at the beginning of 2004," said Panaino.
When comparing the South African results to the rest of Africa, the only African market to yield a lower result than South Africa was Kenya, with a score of 49, while Morocco showed the highest level of optimism with a score of 94.1, closely followed by Nigeria at 91.4 and Egypt at 90.7.
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