South African consumer confidence has risen to levels last seen in 2009, according to the MasterCard Worldwide Index of Consumer Confidence released on Thursday.
“The survey recorded an overall increase of 10.8 points in South African consumer confidence from a low of 54.7 only six months ago to a current optimistic score of 65.5,” MasterCard said in a statement.
The index — which measures consumer confidence on prevailing expectations in the market for the next six months — is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
The five indicators that make up the overall consumer confidence score all increased. They are the economy, employment, stock market, regular income and quality of life.
“South Africa’s optimistic score of 65.5 is a jump of nearly 20% compared to the 54.7 that the market scored in the previous six months, with all five of the key indicators that make up the overall consumer confidence score seeing increases,” said Anna Jones, area head for MasterCard Worldwide Southern Africa.
“This indicates that South Africans are feeling strongly positive about the next six months.”
Formal sector employment
However, the overall confidence level was still far below its historical peak of 91.1 points in the second half of 2006.
It was also under South Africa’s historical average of 73.2 since the survey was first conducted in the first half of 2004.
Respondents recorded the most significant increase in optimism on employment with the indicator up 15.2 points to a current score of 63.8.
“The accuracy of the survey results for employment is supported by data from Statistics South Africa that confirms a return to formal sector employment creation since the fourth quarter of 2010,” said independent economic adviser Roelof Botha.
Regular income was the most optimistic of the five indicators increasing from 69.2 six months ago, to 75.3.
When respondents were asked whether they were expecting their regular income to increase, remain the same or decrease over the next six months, nearly 45% of South African respondents said they were expecting it to increase.
Increased income levels
Forty percent said they were expecting it to remain the same and 15% said they expected it to decrease.
“The rise of over six points in consumers’ already high confidence in regular income is correlated to consistent increases in average remuneration levels since the end of the recession,” Botha said.
“According to Statistics South Africa, the average nominal salary in the formal sectors of the economy was more than 27% higher in the first quarter of 2011 than two years earlier.
“Salary increases have also outstripped inflation by a margin of close to nine% over the past two years.”
The strong improvement in the consumer confidence index can be seen in the context of sound increases in the levels of household consumption expenditure, increases in disposable income and the fact that South Africa emerged from the global recession in the third quarter of 2009.
South Africa recorded its seventh quarter of positive real gross domestic product growth in the first quarter of 2011.
“Furthermore, real disposable income levels of households have increased to an all-time high during early 2011 — close to R33 000 in annual per capita terms,” Botha said.
The survey was conducted from March 15 to April 27 2011 among 17 620 consumers in the Asia/Pacific, Middle East and Africa regions. — Sapa