South Africa’s consumer confidence for the fourth quarter of 2022 bounced back to levels last seen at the end of 2019 before the Covid 19 pandemic struck, clawing back losses recorded during the first half of this year.
Even so, it still “signifies depressed consumer sentiment”, FNB and the Bureau for Economic Research’s (BER) Consumer Confidence Index (CCI) noted in the release of the latest reading on Thursday.
Improved consumer sentiment was driven by factors such as improved employment, the impacts of declining petrol prices, among others, FNB’s chief economist, Mamello Matikinca-Ngwenya said.
The quarterly CCI measuring the mood of consumers in South Africa, recovered to -8 from -20 previously (Q3), after plunging to -25 during the second quarter of 2022.
“An uptick in employment growth, particularly in the now fast-recovering services sector, and substantially lower petrol prices since the third quarter no doubt bolstered consumer sentiment in the run-up to the festive season,” said Matikinca-Ngwenya.
Relative to the previous quarter’s reading, the recovery in confidence comes “as a surprise given” given rampant inflation and aggressive interest rates to curb it as well as increasingly frequent load shedding, FNB said.
“The significant improvement in consumer sentiment is positive news for the economy and suggests that household consumption expenditure is holding up – or even expanding slightly – despite difficult economic conditions,” Matikinca-Ngwenya said.
She added that the services sector looks to benefit from the improved sentiment, particularly restaurants, transport, recreation, and tourism-related services, citing that the retail sector will likely underperform compared to the 2021 festive season.”
The sub-indices for the purchasing of durable goods and the general economic outlook improved by 11 and 12 points respectively, although remaining in negative territory. This indicates that consumers view the current quarter as an inopportune time to purchase hard household goods and other big-ticket items, and expect the country’s economy to deteriorate over the next 12 months.
In contrast, consumers expect household finances to improve over the same period, despite worries about the economy, that index jumped 15 points to reach 13 in for the fourth quarter of 2022.
“The uptick in the household finances sub-index of the CCI can largely be ascribed to a marked improvement (and positive expectations) among black households, as white households became even more concerned about their financial prospects during the fourth quarter,” FNB said. – Moneyweb
