Consumers more confident

2011-06-22 00:00

THE sizeable income gains made by South African households in recent years combined with continued growth in public sector employment levels have kept consumers in high spirits.

This is despite concerns over looming interest rate hikes and waning confidence over durable goods.

FNB chief economist Dr Cees Bruggemans told The Witness yesterday that although many consumers continue to deleverage (reduce their debt levels), consumer confidence levels remain high by historical standards.

The latest First National Bank/Bureau for Economic Research (FNB/BER) Consumer Confidence Index (CCI) for the second quarter of 2011, released yesterday, remained in positive territory, recording a level of +11 points compared with +9 points in the previous quarter.

The CCI indicates that most respondents are satisfied with current conditions.

Bruggemans said the income gains made by consumers have come from a rise in commodity (exports) prices, which translated into higher incomes for certain categories of employees in the commodities sector.

The first quarter (2011) employment statistics released by Statistics SA yesterday also confirmed that the public sector was the main driver of employment growth — accounting for about 70% of the country’s employment gains in the past twelve months, he added.

General wage increases also accounted for the income growth.

Bruggemans said that at a growth rate of 10% year on year retail sales statistics for April 2011 appeared to support this positive level of consumer confidence.

“There continues to be fairly good retail momentum,” he said.

Standard Bank economist Nomvuyo Gama noted that the higher CCI confirms the bank’s view that household consumption will continue to recover in 2011.

“The rebound in confidence in quarter two of 2011, which comes despite a series of petrol price increases in the quarter as well as mounting food prices, suggests that the decline seen in quarter one of 2011 might have been overstated. Standard Bank has pencilled in an increase of 4,6% this year, compared with growth of 4,4% in 2010,” Gama said.

Standard Bank said the Reserve Bank’s quarterly bulletin, released yesterday, showed that real household consumption expenditure accelerated in the first quarter of this year, boosted by strong increases in disposable income.

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