Ayanda Shezi

Classic Business Day: SA nears top of confidence survey
 
Economics Correspondent

SA’s consumer confidence increased 30% in a year, courtesy of low personal taxes, a series of interest rate cuts, employment growth and a bullish stock market, a MasterCard survey released yesterday showed.

However, the surge in confidence, which shot up from 64,4 points in February last year to 83,5 points in the same month this year, was weighed down by “temporary factors” such as higher petrol prices and retrenchments in certain sectors of the economy.

The MasterIndex consumer confidence rating showed that South Africans were increasingly optimistic about their prospects. The maximum reading on the index is 100.

“From consumption to investment, jobs and overall quality of life, the average South African has become more confident about his/her future,” MasterCard southern Africa’s senior vice-president Eddie Grobler said yesterday.

The survey targeted people with bank accounts aged between 18 and 64. It analysed consumers’ perceptions of economic conditions over the next six months and the index was compiled from five variables: employment, which increased 35% to 76,6 points; the economy, up 34% to 85,4; regular income, which gained 9% to 94,3; the stock market, up 50% to 86,6; and quality of life, which reached 74,4, an increase of 28%.

The survey mirrors the FNB/BER consumer confidence index, compiled by the University of Stellenbosch’s Bureau for Economic Research, which was at near record highs during the first quarter of this year.

The size and nature of the improvement in the index is unlikely to continue, T-Sec chief economist Mike Schussler said.

“This does not mean that the country will become negative, but that another 30% improvement would take confidence past 100, which is statistically impossible,” he said.

The difference between “regular income” confidence and “employment” confidence, defined in the survey, is that many South Africans tend to receive welfare payments as well as regular pensions. “The income from informal market activities may also be making many South Africans confident, because they do not see an informal activity as employment, but as an income-generating opportunity.”

Schussler said the survey’s finding on employment and income confidence was supported by SA’s employment report released last month, which showed formal sector jobs had increased 2,7% last year.

“This, combined with last year’s gross domestic product of 3,7%, the highest growth rate in four years, means that South Africans are feeling more confident about their future,” Schussler said.

The good performance of the stock market index can be seen in the JSE Securities Exchange SA’s all-share index, which gained about 3,4% since the beginning of the year. Interest rates remain at 24-year lows at 7,0%, while CPIX (consumer inflation less mortgage costs) is at a benign 3,6%.

Trailing oil-producing countries in the south Asia, the Middle East and Africa region (Samea), SA was the fourth most optimistic country overall. “The reason for this is that record-high oil prices would make consumers in oil-producing countries very positive,” Schussler said.

Indian, Egyptian and Lebanese consumers were more pessimistic than South Africans.

Compared to the average SAMEA figure of 70,1, Asia Pacific at 63,2 and the Australian MasterIndex (61,5), the South African MasterIndex was “undeniably positive”, said Grobler.