South African consumer confidence has improved for the second half of 2013 according to the results of the latest MasterCard Index of Consumer Confidence, released on Monday (16 September).<\/p>\n
However,\u00a0South Africa\u2019s consumer confidence is the lowest on the continent, with the African average coming in at 78.1.<\/p>\n
The Index score is calculated with zero as the most pessimistic, 100 as the most optimistic and 50 as neutral.<\/p>\n
The most recent survey was conducted between April and May 2013, and involved 12,205 respondents aged 18 to 64 in 27 markets across the APMEA region.<\/p>\n
In Africa, the survey was conducted in Egypt, Kenya, Morocco, Nigeria and South Africa.\u00a0Nigeria remains the most optimistic country (94.3), followed by Morocco (85.2) and Kenya (76.5).<\/p>\n
With a score of 56.3, the Index currently describes local consumer confidence as “neutral-positive”. This is an increase of 8.3 points from the somewhat pessimistic score of 48 recorded six months ago.<\/p>\n
The survey measures consumer sentiment and expectations of the country\u2019s performance using five economic indicators: Economy, Employment, Stock Market, Regular Income and Quality of Life.<\/p>\n
Of the five indicators, the most significant shift occurred in respondents\u2019 impressions of the economy which rebounded from the pessimistic 40.8 recorded six months ago, to a score of 54.1 in the current Index.<\/p>\n
\u201cFirm growth in semi-durable expenditure by households, and increases in spend on services in the first quarter of 2013 have undoubtedly contributed to our economy being regarded with more optimism,\u201d said Dr Martyn Davies, independent economist and CEO of Frontier Advisory.<\/p>\n
\u201cThere have also been positive movements in manufacturing output as well as retail sales.\u201d<\/p>\n
Employment saw the second largest improvement in the index, receiving a neutral-positive score of 54.7 up from a somewhat pessimistic score of 42.3 received six months ago.<\/p>\n
Davies credits this change in optimism to fewer labour disputes and new job opportunities created in the months preceding the survey. According to Statistics South Africa, in Q2 2013 both the formal and informal sectors saw increases in employment, with gains concentrated in the construction, finance and other business services and trade industries.<\/p>\n
Commenting on the improvement in sentiment around the Stock Market, from a score of 45.1 six months ago to a current score of 53.6, Davies said: \u201cThe positive outlook in the JSE\u2019s expected performance is in line with trends on the FTSE\/JSE Africa Index Series (Alsi), which has risen over the past 18 months, disregarding the challenging growth environment in the real economy.”<\/p>\n
\u201cAlthough volatile in recent months, the Alsi reached a new all-time high in the last days of May 2013, up almost 50% from its low at the beginning of August 2011. This was underpinned by factors such as a weaker rand, rising international equity prices, and a general positive sentiment in global markets.\u201d<\/p>\n
A comparison of consumer confidence in South Africa\u2019s three major cities reveals that respondents in Johannesburg, the economic hub of the country, are the most optimistic with a score of 69.9 – up from 63.5 in the previous Index.<\/p>\n
Durban\u2019s consumer sentiment was recorded at 55.3, increasing from 44.6, while of the three; Cape Town\u2019s respondents show the lowest level of consumer confidence.<\/p>\n
With a score of 34.2, Cape Town\u2019s score also shows the smallest growth in confidence off a score of 32.2 in the previous Index.<\/p>\n
\u201cSouth Africa lags in the region in terms of GDP growth,\u201d noted Davies, citing data from the International Monetary Fund\u2019s latest World Economic Outlook update.<\/p>\n
\u201cAlthough the largest economy in Africa, South Africa\u2019s economy is expected to grow just 2% in 2013, compared to the 5.1% growth forecast for sub-Saharan Africa.\u201d<\/p>\n
\u201cWhile it is encouraging that consumer sentiment for the rest of the year has improved, South Africa\u2019s consumer confidence is below the country\u2019s historical average of 69.3 and its peak of 91.1 since the survey was first conducted at the beginning of 2004.”<\/p>\n
“Local labour challenges, currency weakness, depressed commodity markets, rapidly slowing emerging market growth outlooks, and sluggish domestic growth continue to temper South Africans\u2019 expectations of the future,\u201d MasterCard said.<\/p>\n
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