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Q3 FNB/BER consumer confidence rebounds after Q2

‘Consumers overall are still very pessimistic in terms of buying durable goods’ – Jason Muscat – senior industry analyst, FNB.

SIKI MGABADELI: Good news on consumer conference – relatively good. The FNB/BER Consumer Confidence Index came in at ‑3 points in the third quarter, That doesn’t sound good, but it’s a rebound from ‑11 points in the second quarter. So there’s a level of pessimism still, but it’s better than where we were.

Let’s chat to Jason Muscat, who is a senior industry analyst at FNB. Jason, thanks for your time this evening. I’m right –we are still negative but we are better than where we were in quarter two.

JASON MUSCAT: Absolutely, Siki. The long-term average is +4, so I think we need to keep that in mind. Nevertheless, we’ve had an 8-point increase to ‑3, and that’s certainly a positive jump from where we were at the ‑11 in the second quarter.

SIKI MGABADELI: So where did that jump come from? What underpins it?

JASON MUSCAT: This is an important one. What we’ve seen within the index for the third quarter is that many of the questions that were asked of the survey respondents were looking forward to the next 12 months. So we would request respondents to answer whether they are confident about their own household finances and whether they are confident about the economic outlook for South Africa. And both of those indicators jumped quite nicely in the third quarter.

However, that said, consumers overall are still very pessimistic in terms of buying durable goods.

SIKI MGABADELI: And is that both poor and richer households?

JASON MUSCAT: Yes, it certainly is. I think what’s important to remember here is the period in which the survey was conducted. What we saw during that period was that the rand was trading at around R13.50/dollar. We had one rand petrol-price decrease and we had the outcomes of the local government elections. And I think that stirred many people to feel that there might be an improvement or certainly a change in terms of the economic fortunes of South Africa.
Subsequent to that there has been a deterioration, and we are relatively cautious to read too much into the current number and we could well see that the confidence index drops back in the fourth quarter.

SIKI MGABADELI: Okay. But ultimately they do expect the economy to do better in 12 months’ time. What about their own financial prospects of households? How do they feel about that?

JASON MUSCAT: That improved from 4 to 16, so it was a nice 12-point increase. I think the important point to remember there is that during this period inflation was coming down and that certainly gives households some mediation in terms of the pressure that they were feeling in terms of the price of goods going up.

SIKI MGABADELI: We’ll leave it there. Thanks for your time today. Jason Muscat is senior industry analyst at FNB.


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