Results of the latest MasterCard Worldwide Index of Consumer Confidence for the first half of 2008 show that consumer confidence in South Africa remains optimistic, despite a minor decrease from last year.
Out of a possible score of 100, the South African index score decreased from 86,5 for the first half of 2007 to 83,7, it said in a statement on Wednesday.
However, the bi-annual survey did show a slight increase in consumer confidence when compared to the previous index score of 80,7 for the second half of 2007.
The survey, conducted twice a year in selected markets in South Asia, the Middle East and Africa, analyses consumers’ perceptions of economic conditions for the upcoming six months.
The South African survey focused on the three urban areas — Johannesburg, Cape Town and Durban — and revealed that Durban, with a score of 86,1, was the most optimistic of the three areas.
Johannesburg and Cape Town had index scores of 84,9 and 78,9 respectively.
The category that South Africans were most positive about was regular income.
When asked whether they expected their regular income to either increase, remain the same or decrease, nearly 55% of the respondents said they expected it to increase, while only 6,8% expected it to decrease.
This resulted in a score of 89, which, while still high, marked a decline of 7,8 from the first half of 2007.
According to T-Sec chief economist Mike Schussler, the drop of nearly eight points illustrated that some people were finding it harder to attract a regular income.
”This, combined with the decline in the economy indicator from 88,2 to 81,9 indicates that consumers are starting to feel the pinch of higher interest rates, which started increasing in June 2006,” he said.
The highest increases in confidence, compared with the previous index for the second half of 2007, were found in the stock market (66,8 six months ago to 83) and the quality of life indicators (77,9 a period ago to 82,9).
”The jump in consumer confidence in the stock market seems to indicate that people observe the markets very closely, and, as the JSE bounced back from its August 2007 dip, consumers took note,” Schussler said.
The moderate increase in the quality of life category indicated that consumers were still very content with their overall situation in life, he said.
The employment indicator was slightly more negative compared with a year ago, down 1,4 points, although it did show a marginal increase in comparison with the previous six-month period, from 81,2 to 81,9.
Schussler said that, while petrol and food price inflation grew in 2007, there was evidence that inflation was moderating a little and that this, combined with the fact that economic growth remained above 4% for the first three quarters of 2007, resulted in the relatively high level of optimism shown by South Africans.
However, he expected higher interest rates and continued inflation, as well as the fact that the survey was undertaken before the major electricity shortages occurred, would impact on future consumer confidence figures. — Sapa