Consumer confidence below zero 12 quarters in a row

Johannesburg – Consumer confidence is still low and will continue on this trend for the remainder of the year, said an analyst.

The FNB and Bureau of Economic Research (BER) Consumer Confidence Index (CCI) for the second quarter of 2017 is at -9. This outcome is based on interviews with 2 500 mainly urban adults.

The CCI was -5 in the first quarter of the year, which was an improvement from -10 reported in the last quarter of 2016. The CCI is still above the -15 recorded in the second quarter of 2015. But it is still performing poorly given the average level of +4 recorded since 1994, the report indicated.

The CCI has been negative for 12 consecutive quarters. “The latest data marks the longest streak where consumer confidence has been at or below zero since the survey started in 1982,” the report read.  

Jason Muscat, senior economic analyst at FNB noted that although confidence levels are low and the willingness to spend remains weak, it did not wane further during the first half of the year. This suggests that the decline in new car sales and retail sales was attributed to consumers’ ability to spend which is related to their disposable income and access to credit.

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"Despite the recent deceleration in food inflation, food prices remain very high and will continue to dampen the real purchasing power of consumers, especially for low income households,” said Muscat.

“Per capita real disposable income is set to deteriorate further on the back of exceedingly poor economic growth, little to no job creation, and substantial increases in personal income taxes for middle and high-income earners.”

Low business confidence levels will also limit household credit extension. “Bar a swift, confidence-inspiring change to South Africa's current political landscape, consumer spending is likely to remain depressed during the remainder of 2017," said Muscat.


In the first quarter, consumers, business people and analysts expected the economy to improve in 12 months’ time. This was attributed to improved agricultural production, the moderation in inflation and signs of economic improvement in global economies, according to the report. But sentiments changed in the second quarter of the year.

The economic outlook sub-index fell from -1 to -22. The report suggests this may be driven by news of the sovereign credit downgrades following the Cabinet reshuffle as well as reports that the economy had entered a recession.

Fewer consumers expect their household finances to improve in the next 12 months. The household finance outlook sub-index increased from +3 in the first quarter to +6 in the second quarter.

The increases in personal taxes had offset gains made by salary and wage increases and the decline in inflation.

“The weak state of the economy and the related poorer financial performance of many private firms not only limited salary and wage increases, but also led to a reduction   if not the full scrapping – of overtime and bonuses,” the report explained.

Uncertainty also increased as concerns about job security and new employment opportunities were raised.

Limited credit extension also meant households need to adjust spending to match their real spending power, in addition to servicing existing debt, according to the report. 

Elevated food inflation also negatively impacted low income households, those earning less than R3 000 and dependent on social grants. “It is therefore no surprise that their confidence is not only the lowest of all the groups, but also remained unchanged at this low level throughout the first half of this year,” the report read.

Consumers do not consider the present time to be suitable for buying durable goods, such as vehicles, furniture, appliances and non-essential, luxury goods. This sub-index moved sideways from the -13 recorded in the fourth quarter of 2016 to -12 in the second quarter of 2017. Levels recorded for this sub-index have been at or below zero for the past nine years, or 37 quarters, the report explained. 

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