Confidence among South African consumers jumped sharply in the first months of 2010, a survey showed on Tuesday, as they anticipated an upturn in economic growth and improved personal finances this year.
The consumer confidence index increased by nine points to 15 in the first quarter, the biggest quarter-on-quarter rise in five years, sponsors First National Bank (FNB) and the Bureau for Economist Research (BER) said.
Low domestic demand helped push the economy into its first recession in nearly two decades last year, hitting mostly the key mining and manufacturing sectors and leading to nearly 900 000 jobs being lost.
Although manufacturing is on the mend, domestic demand has generally lagged the recovery, leading some analysts to suggest the central bank might cut interest rates further to spur growth, on top of five percentage points of reductions between December 2008 and August last year.
But Tuesday’s survey, which covered the January to March period but was carried out in February, showed a market improvement in consumers’ willingness to buy durable goods.
“The [consumer confidence index] increase was caused by even more consumers expecting the economy and their own finances to improve during the next 12 months,” the sponsors said.
South Africa’s economy is expected to grow by 2,3% in 2010 after contracting 1,8% last year, the Treasury said last month.
“A low interest rate, greater affordability, pent-up demand, as well as a degree of stability returning to the labour market could all have played a role in convincing more consumers to re-evaluate the appropriateness of the present time to buy durable goods,” the sponsors added. — Reuters