Consumer confidence deteriorates dramatically as economic outlook sours | The Citizen

2022-06-29 04:01:00 PM

Consumer confidence deteriorates dramatically as economic outlook sours | The Citizen

Consumer confidence deteriorates dramatically as economic outlook sours | The Citizen

Even high-income consumer confidence has showed a marked decrease, indicating worry about the economic outlook and their household finances.

Notable though is even high-income consumers’ confidence is seeing a sharper decline than that of low-income South Africans since the end of 2021.plunged to -25 in the second quarter of 2022.ALSO READ:The Bureau for Economic Research (BER) says the remarkable collapse of consumer confidence can be ascribed to a major deterioration in the economic outlook (from -18 to -39) and a complete turnabout in the household financial prospects (from +8 to -5).

It is clear that the vast majority of affluent households now anticipate that their household finances and the country’s economic growth rate will deteriorate.ALSO READ:“The economic ramifications of Russia’s war in Ukraine dealt hammer blows to consumer confidence around the globe and South Africa is no exception. Domestically, petrol prices have soared by R4,60 per litre (nearly 25%) since January, the consumer price inflation rate breached the 6% upper range of the Reserve Bank’s target for the first time in 5 years and the prime interest rate has been hiked by 75 basis points since the start of the year,” says Mamello Matikinca-Ngwenya, chief economist at FNB.

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Business Maverick: US Consumer Confidence Hits 16-Month Low on Drag From InflationUS consumer confidence dropped in June to the lowest in more than a year as inflation continues to dampen Americans’ economic views.

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Consumer confidence in South Africa drops to historic lows: indexDespite the lifting of almost all Covid restrictions and improved business sentiment, the FNB/BER Consumer Confidence Index (CCI) plunged to -25 in the second quarter of 2022, having already slipped from -9 to -13 index points during the first quarter of 2022. It has been low since 1994

JSE slips on renewed fretting about a poor economic outlookThe US Federal Reserve has played down the risk that the US economy will tip into a recession You must close shop now you have been reporting useless news not progressively for SAns.

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Consumer confidence plunges to three-decade lowConsumer sentiment is expected to weaken more given the worsening inflation and interest rate outlook, FNB says

Image: iStock Consumer confidence has deteriorated dramatically as the economic outlook sours, signalling a marked slowdown in consumer spending in the coming months.The Conference Board’s index decreased to 98.29 June 2022 - 13:16 Reuters Picture: 123RF/SOLARSEVEN London — Global stock markets slipped for the second straight day on Wednesday and bond yields inched lower on growing fears that policymakers bent on dampening inflation will tip their economies into recession.Consumer confidence surveys provide regular assessments of consumer attitudes and expectations and are used to evaluate economic trends and prospects.

Notable though is even high-income consumers' confidence is seeing a sharper decline than that of low-income South Africans since the end of 2021. After already slipping from -9 to -13 index points during the first quarter of 2022, the FNB/BER Consumer Confidence Index (CCI) plunged to -25 in the second quarter of 2022.2 reading in May, data Tuesday showed. Apart from the index reading of -33 in the second quarter of 2020, when the sudden outbreak of the pandemic and implementation of level 5 lockdown. Data on Tuesday showed US consumer confidence dropped to a 16-month low in June, yet several Fed policymakers pledged further rapid interest-rate hikes, citing the need to tame “unbridled” inflation .. A measure of expectations — which reflects consumers’ six-month outlook — dropped to the lowest in nearly a decade as Americans grew more downbeat about the outlook for the economy, labor market and incomes.. “Having already slumped from -11 to -18 index points in the first quarter, the confidence level of high-income households (earning more than R20,000 per month) crashed to -30 in the second quarter.

Consumer confidence has deteriorated dramatically as the economic outlook sours, signalling a marked slowdown in consumer spending in the coming months. As the Federal Reserve raises interest rates to curb price pressures, higher borrowing costs risk denting purchases for big-ticket items like homes, cars and appliances. That weaker momentum carried into Wednesday, sending an Asian ex-Japan index 1. Notable though is even high-income consumers’ confidence is seeing a sharper decline than that of low-income South Africans since the end of 2021. After already slipping from -9 to -13 index points during the first quarter of 2022, the FNB/BER Consumer Confidence Index (CCI) plunged to -25 in the second quarter of 2022. The share of respondents who said they intend to buy a vehicle or major appliance in the next six months increased from a month earlier. Apart from the index reading of -33 in the second quarter of 2020, when the sudden outbreak of the pandemic and implementation of level 5 lockdown decreased sentiment, the new reading is the lowest in more than 3 decades. US and German 10-year bond yields slipped 5-6 basis points, the former down more than 30 bps from mid-June high. Official data indicates that growth in real consumer spending remained robust at 3. Consumers see prices in the next year rising at the fastest rate in the group’s data back to the 1980s.” FNB chief economist Mamello Matikinca-Ngwenya noted that The non-payment of the R350 per month social relief of distress (SRD) grant to 10.

2% year-on-year during the first quarter of 2022, but this is about to change as consumers will spend less in coming months. ALSO READ: National disaster coming for middle class – Here’s how to avoid being pushed over poverty line Remarkable collapse in consumer confidence The Bureau for Economic Research (BER) says the remarkable collapse of consumer confidence can be ascribed to a major deterioration in the economic outlook (from -18 to -39) and a complete turnabout in the household financial prospects (from +8 to -5). Play Video “Consumers’ grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.9% annual inflation prints across German provinces, an 8% June reading is expected for the country later in the day, compared with 7. The index measuring if it is a good time to buy durable goods, such as vehicles, furniture, household appliances and electronic goods, also decreased from -28 to -32, indicating that consumers consider the present as an inappropriate time to buy durable goods. High-income consumer confidence already slumped from -11 to -18 index points in the first quarter and now the confidence level of high-income households, earning more than R20 000 per month, crashed to -30 in the second quarter, only 3 index points from the historic low of -33 recorded in the second quarter of 2020.” What Bloomberg Economics Says… “The widening gap between consumers’ present situation and their expectations of the future raises the risk of recession. It is clear that the vast majority of affluent households now anticipate that their household finances and the country’s economic growth rate will deteriorate. “The problem is that the level of inflation is so problematic in so many parts of the world and we are a long way from central banks being able to declare the job is done,” O’Connor said. “While household consumption expenditure still surprised on the upside in the first quarter of 2022, the dramatic deterioration in confidence points to a sudden slump in consumers’ willingness to spend and foreshadows a significant slowdown in real consumer spending growth relative to the strong first quarter.

The confidence level of middle-income households, earning between R2 500 and R20 000 per month, also decreased by -11 to -23, while the confidence of low-income consumers, who earn less than R2 500 per month, declined from -6 to -16 index points.” –Eliza Winger, economist To read the full note, click here Nearly 30% of respondents expect business conditions to worsen in the back half of the year, the largest share since March 2009, during the height of the financial crisis. Although consumer sentiment is now very depressed across all three income groups, affluent consumers are considerably more downbeat compared to low-income households, the BER points out. ALSO READ: Various economic shocks derail solid momentum at start of 2022 War, fuel prices, inflation and repo rate hammers consumer confidence “The economic ramifications of Russia’s war in Ukraine dealt hammer blows to consumer confidence around the globe and South Africa is no exception. Respondents expect prices to rise in the next 12 months at nearly the fastest pace in 40 years.5% and Hong Kong lost 2% “Inevitably, markets tend to overreact to these sorts of news [easing of Covid restrictions] ,” said Carlos Casanova, senior economist at UBP in Hong Kong. Domestically, petrol prices have soared by R4,60 per litre (nearly 25%) since January, the consumer price inflation rate breached the 6% upper range of the Reserve Bank’s target for the first time in 5 years and the prime interest rate has been hiked by 75 basis points since the start of the year,” says Mamello Matikinca-Ngwenya, chief economist at FNB. “While spiralling food and fuel prices are probably the main concern for less affluent households, the prospects of further steep interest rate hikes and sinking share prices on the JSE would have compounded the inflationary pressures when it comes to middle- and high-income households.3%, and six months from now, respondents were also more pessimistic.” Households will likely start to draw on savings and slash their discretionary spending – especially on big-ticket durable goods – to buttress purchases of basic necessities and support the recovery in spending on clothing, restaurants, recreation and entertainment following the lifting of Covidrestrictions, she said.

” Mamello Matikinca-Ngwenya says non-payment of the R350 per month social relief of distress (SRD) grant to 10..6 million South Africans in April and May probably also weighed on the confidence levels of many low-income households.. “However, a substantial improvement in job creation in recent months and Sassa’s commitment to resume the SRD grant payments at the end of June probably prevented an even more pronounced decline in low-income consumer confidence during the second quarter.” The BER says although consumer sentiment was expected to weaken further due to a worsening inflation and interest rate outlook, the extent of the drop in consumer confidence is alarming. “Save for the panicked level 5 lockdown period during the initial outbreak of the COVID pandemic in SA, the index is now at its lowest level in 35 years.

” ALSO READ: Government’s move to scrap Covid-19 regulations positive for SA’s economy – expert Household consumption slows down significantly Household consumption expenditure still surprised on the upside in the first quarter, but the dramatic deterioration in confidence points to a sudden slump in consumers’ willingness to spend, which foreshadows a significant slowdown in real consumer spending growth relative to the strong first quarter. Although consumers are likely to tighten their purse strings, the BER says the surprisingly large fall in consumer confidence could signify an overreaction to recent developments and may not translate into an equally large contraction in consumer spending. Matikinca-Ngwenya says positive developments, such as the scrapping of all remaining pandemic regulations, could result in a gradual recovery in job creation, while the back payment of missed SRD grants could counter some of the mounting inflationary and interest rate pressures. Affluent consumers’ savings over the last two years should also support spending by high-income households, but the combination of soaring food and fuel prices as well as increased wariness among consumers will no doubt see a realignment of consumer budgets, Matikinca-Ngwenya says. It is likely that households will start to draw on savings and slash their discretionary spending, especially on big-ticket durable goods, to buffer buying basic necessities and support the recovery in spending on clothing, restaurants, recreation and entertainment.

ALSO READ: Even higher inflation and repo rate means more consumer pain ahead What consumer confidence surveys show Consumer confidence surveys provide regular assessments of consumer attitudes and expectations and are used to evaluate economic trends and prospects. The surveys are designed to explore why changes in consumer expectations occur and how these changes influence consumer spending and saving decisions. A low level of confidence indicates that consumers are concerned about the future and are worried about job security, salary increases and bonuses. They then tend to cut spending to only include basic necessities to be able to pay their debts. If confidence is high, consumers tend to incur debt or reduce savings and spend more on discretionary items, such as furniture, household equipment, motor vehicles, clothing and footwear, which are often financed on credit.

Spending on these items declines when confidence is low, as households can generally delay their purchase without experiencing an immediate deterioration in living conditions, the BER says. BUSINESS ","category_class":"child-of-business","time_ago":"1 hour ago","premium":false,"gallery":false,"excerpt":"Schools will be charged between 1,5 and 2,5 times residential rates, which could see one school\u0027s bill go up from R40 000 to R427 000 a month.","format":false,"media":"","oovvuu":"","oovvuu_div":"","external_link_url":""},{"id":3129038,"name":"Stage 6 load shedding a \u0027serious blow\u0027 on all sectors of the economy \u2013 Busa","permalink":"https:\/\/www.citizen.co.

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