SA consumer confidence at lowest ebb since 2004

2010-01-28 11:59

CONSUMER confidence in South Africa is at its lowest level since

2004, a survey released on Thursday found.

The latest MasterCard Worldwide Index of Consumer Confidence found

that, having struggled through the first recession in 17 years, consumer

confidence in South Africa has fallen to 59.8 from 67.3 six months ago and 78.7

a year ago.

“This is the lowest score ever recorded since the survey was first

conducted in 2004 in South Africa.

“It is also below South Africa’s historical average of 79.35 over

the last two years,” the survey said.

South African consumers are less confident than they were in both

January and July last year.

Anthony West, general manager of Africa, MasterCard

Worldwide, said an estimated one million jobs had been lost in the South African

labour force over the past year.

“With the South African national Treasury announcing a budget

deficit of 7.6% of gross domestic product in the 2009/10 fiscal year, consumers

and businesses seem to have been hit harder by the global economic turmoil than

was first anticipated,” West said.

Roelof Botha, independent economic adviser, said the decline in the

overall MasterCard Confidence Index score to its lowest level since inception

was not surprising when viewed against the background of South Africa’s first

recession since the transition to democracy.

“Although the country managed to return to positive real GDP (gross

domestic product) growth in the third quarter of last year, it will take at

least another quarter for some sectors of economic activity to fully

recover.”

The MasterCard Worldwide Index of Consumer Confidence 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 index score is calculated with zero as the most pessimistic,

100 as the most optimistic and 50 as neutral.

The latest survey was conducted from?October 1 to November 9 last

year.

The survey found that while South Africa saw an overall drop in

consumer confidence for the market as a whole across all the major indices, the

scores remained slightly positive with quality of life scoring 56.9, regular

income scoring 66.8, economy scoring 59.0 and employment coming in at

53.7.

Of the five indices that MasterCard measured for consumer

confidence, only the stock market indicator presented an increase from 53.7 in

the second half of last year to 62.6 this year.

According to Botha, the increase in the stock market indicator was

closely correlated to trends in the All-share Index (Alsi) of the Johannesburg

Stock Exchange (JSE).

“The percentage improvement in the indicator over the past six

months amounts to 17%, compared to the increase in the JSE Alsi of 13% and 22%

during the three months and the six months preceding the month of the survey,

respectively,” Botha said. Johannesburg ousted Durban as South Africa’s most

confident city with a positive score of 70.6.

This score was well above the country’s overall confidence score of

59.8 and 4.1 points higher than six months ago.

Durban’s score plummeted 39.2 points from 89.6 a year ago to a

current score of 50.4, not only making it the least confident city in South

Africa, but also only fractionally positive.

Cape Town experienced a decline of 9.6 points from 66.7 to a

slightly optimistic score of 57.1.

Botha said a plausible explanation for the

divergence between the three cities covered by the survey was the toll that the

recent recession has taken on tourism.

He added that the decline was particularly severe for Durban, which

recently lost the Blue Flag status of several of its beaches.

On a positive note, he said it should be pointed out that

Johannesburg possessed a highly diversified economy, with every sub-sector of

economic activity contributing to overall economic output.

“The fact that the latest score for Johannesburg is 4.1 points

higher than the last survey is a clear indication amongst the city’s respondents

that the economy has returned to positive economic growth.”


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