MasterCard’s Consumer Confidence Index released its results for November and December 2012, showing an overall decline of 21.8 points, down to 48.0 points, from 69.8 six months earlier. South African consumer sentiment currently shows a negative-neutral outlook.
Described as the most comprehensive consumer confidence index in the Asia/Pacific, Middle East and Africa (APMEA) region, it polled 11,339 respondents aged 18-64 across 25 markets in the region.
The index, now in its ninth year in South Africa, is based on a survey that measures consumer confidence in the country over the next six months on five economic perspectives: economy, jobs, stock market, regular income and quality of life. . The index score is calculated with zero being extremely pessimistic, 100 being extremely optimistic and 50 being neutral.
“The index results reflect the uncertainty that South Africans have felt over the last six months of 2012, with a view to the six months ahead,” said Philippe Panano, president of MasterCard South Africa.
It is neither hopeful nor pessimistic.
“However, it should be noted that the overall score of 48.0 still falls within the index’s neutral range (between 40.0 and 60.0) while the index scores fall sharply and sentiment declines. This means that South Africans surveyed are neither optimistic nor optimistic. Despairing months – simply less optimistic than before.
“South Africans’ expectations for their future have been affected by the Marikana massacre and the labor unrest that took place across the country in late 2012. Other contributing factors include downgrades by several international rating agencies, sluggish private sector and consumer spending, higher inflation and continued unemployment. unemployment,” added Dr. Martin Davies, independent economist and CEO of Frontier Consulting.
Very difficult quality of life
Four of the five indicators — employment, the economy, the stock market and quality of life — each fell by more than 20 points, indicating a much worse outlook than in the previous survey. The standard income indicator fell by just 10.3 points from 80.3 to 70.0, which, despite the decline, recorded the highest score of all five indicators.
Quality of life indicator In the second half of 2012, it showed a significant decrease of 28.1 points from 70.0 to 41.9 in the current index.
“Contributing to this sharp decline are low wage increases, high inflation and weak employment opportunities directly linked to consumer spending trends, all of which are exacerbated by South Africa’s low savings rate,” says Panano.
The employment indicator fell 25.5 points to 42.3 from 67.8 six months ago, the second largest decline.
“Job losses in the formal sector were recorded in the fourth quarter of 2012. In addition, 80,000 new jobs were created in 2012, far below the government’s target of 500,000 jobs per year. The mining sector and ongoing labor unrest, at least in the private sector, have dampened job prospects,” Davis said. He says.
Economy, stock exchange outlooks reflect slower growth prospects
South Africans’ overall view of the economy has suffered the worst deterioration, falling by 23.4 points from 64.2 in the previous survey to 40.8.
According to Davis, the causes of the deterioration of sentiment around the economy include slow growth in real household consumption expenditures, retail sales and normal job creation, especially in the third quarter of 2012. Partners, particularly the Eurozone, have further contributed to the gloomy economic outlook, influencing how South Africans view their economic position over the next six months.
The stock market indicator fell by 21.6 points to 45.1 points, which, despite the deteriorating outlook, still reflects a somewhat neutral level, indicating that respondents expect the market to slow slightly in the first half of 2013.
The decline is somewhat surprising given the 26% strong gains on the JSE All Share Index (Alsi) in 2012, which hit an all-time high on 23 November 2012, Davies added. “However, this high rate was offset by a weaker rand and higher domestic equity prices, and capital gains on the JSE in the first 10 months of 2012 were 10% lower than in the same period last year.”
A positive outlook for 2013
On a more positive note, South Africans remained optimistic about their ability to earn regular income in the first half of 2013. The regular income indicator, although down 10.3 points, still came in at 70.0, a score considered positive for 2013. index framework.
“The relatively small decline in this indicator is due to lower dividend payments in the third quarter of 2012, which were lower dividend declarations than in previous years. It is also associated with higher wages in the formal sector,” Davis explains.
Africa is equally disappointing
Elsewhere on the African continent, the index showed consumer confidence declined in all markets compared to six months ago, with only Kenya showing an eight-point increase to a positive neutral outlook of 57.1. Even Nigeria, which continues to be the best-performing country on the African continent, fell 2.9 points on the index to 88.5. The only country on the continent where consumer confidence fell worse than South Africa was Egypt, which dropped 24.1 points to 66.6 from 90.7 six months ago. However, despite this setback, Egypt’s results remain firmly on the bright side.
“South Africa continues to lead Africa in terms of competitiveness and ease of doing business indicators (commodity market efficiency, financial market development, technological readiness, business sophistication and innovation and infrastructure development). And labor market efficiency are areas that need further improvement,” says Davies.
“Despite declines in all five indicators in the latest Consumer Confidence Index, the overall score of 48 means South Africans are on the fence about their confidence in South Africa over the next six months. The recent budget speech has drawn some welcome changes in the form of R7bn in employee tax relief, social Subsidy payments increase by 4-5%, and the fact that the government is committed to supporting pension funds, we hope that consumer sentiment will recognize these in the next index. Positive changes,” Panano concluded.
