Consumer confidence bounced back to pre-Covid-19 pandemic levels but consumer sentiment remains depressed, according to a new survey.
The recovery was surprising as consumers were still faced with high inflation, interest rates hikes and load shedding. The FNB/BER Consumer Confidence Index (CCI) recovered from -20 to -8 index points in the fourth quarter plunging to -25 index points during the second quarter.
The survey measured between November 14 to 23, with consumers likely still positive about the political outlook before the release of the Phala Phala report last week, and the implementation of stage 6 load shedding this week showed that all three sub-indices of the index rebounded smartly during the last quarter of the year, while the outlook remained deep in negative territory.
FNB chief economist Mamello Matikinca-Ngwenya said:
"The household financial outlook sub-index of the CCI jumped 15 index points to reach +13 during the fourth quarter, a similar reading compared to the +14 reached during the festive season last year.
"The majority of households therefore expect an improvement in their household finances over the next 12 months, despite being quite pessimistic about the outlook for the national economy," she said.
The CCI showed that the confidence levels of high-income households (earning more than R20 000 per month) leapt from -27 to -10 index points during the fourth quarter, while that of middle-income households (earning between R2 500 and R20 000 p.m.) improved from -19 to -6.
Low-income confidence (earning less than R2 500 pm) declined from -3 to -6 index points, bringing it in line with middle-income confidence.
Matikinca-Ngwenya added that the index had now recovered all the ground lost during the first half of this year to reach the same level recorded during the festive season last year.
Even so, Matikinca-Ngwenya added: "The significant improvement in consumer sentiment is positive news for the economy and suggests that household consumption expenditure was holding up - or even expanding slightly- despite difficult economic conditions.
"However, this time around it seems likely that the services sector, particularly restaurants, transport, recreation and tourism related services, will be the main beneficiary, with the retail sector expected to underperform relative to last year's festive season."