Consumer Confidence Survey - Quarterly analysis of consumer expectations - BER
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Consumer Confidence Survey
Quarterly analysis of consumer expectations
Fourth quarter 2017
2014Q1 | 12 March 2014
Please refer to the glossary on the BER’s website
for explanations of technical terms.Editor: Harri Kemp
Linette Ellis
Email: jhkemp@sun.ac.za
Tel: +27 21 887 2810
Fax: +27 21 883 3101
Technical assistance:
Ester Manefeldt
Language Editor:
Jenny Tucker
© Stellenbosch University
This publication is confidential and only for the use of the intended recipient. Copyright for this publication is held by
Stellenbosch University. Although reasonable professional skill, care and diligence are exercised to record and interpret all
information correctly, Stellenbosch University, its division BER and the author(s)/editor do not accept any liability for any
direct or indirect loss whatsoever that might result from unintentional inaccurate data and interpretations provided by the
BER as well as any interpretations by third parties. Stellenbosch University further accepts no liability for the
consequences of any decisions or actions taken by any third party on the basis of information provided in this publication.
The views, conclusions or opinions contained in this publication are those of the BER and do not necessarily reflect those
of Stellenbosch University.
For more information on the BER’s services please visit www.ber.ac.zaExecutive summary After slumping from -5 in the first quarter of 2017 to -9 during the second quarter, the FNB/BER Consumer Confidence Index (CCI) remained low at -8 index points in the fourth quarter of 2017. The fourth quarter reading of -8 means that the CCI has now been below the zero mark for three consecutive years - the longest uninterrupted negative streak since the survey started in 1982. The marginal increase in the CCI during the fourth In addition, a potential social grants crisis seems quarter can be ascribed to a substantial to have been averted with a deal that will see the improvement in consumers' rating of South SA Post Office pay out social grants from April Africa's expected economic performance in 12 2018. Although a further tightening in fiscal policy months' time (from -22 index points in 2017Q2 to will inhibit the recovery in overall household -2 in 2017Q4). The improvement in this sub-index expenditure, the growth in real consumer of the CCI correlates with the stronger-than- spending is nevertheless projected to improve expected rebound in real GDP growth during the during 2018. second and third quarters of 2017. In contrast, consumers' rating of the appropriateness of the present time to buy durable goods deteriorated from -12 to a 17-year low of - 24 index points, while consumer sentiment regarding the outlook for their household finances slumped from +6 to a 2.5-year low of +2 in the fourth quarter of 2017. Low-income households in particular experienced great financial strain towards the end of 2017, on the back of very high food price increases registered in 2016 and 2017, record high unemployment rates and soaring fuel prices during the second half of 2017. However, there have also been some positive developments since the fourth quarter CCI survey. For one, the confidence-inspiring election of Mr. Cyril Ramaphosa as the new president of the ANC has seen the rand exchange rate strengthen considerably, which should put further downward pressure on consumer price inflation and bolster the purchasing power of households. The outlook for durable goods sales volumes in particular has improved on the back of lower prices for imported durable goods and a recovery in credit extension. This report was completed on 30 January 2018. Please refer to the glossary on the BER’s website for explanations of technical terms.
Contents
Summary of the 2017Q4 consumer confidence survey results .............................................................. 2
Consumer confidence remains depressed ....................................................................................... 2
Technical note ................................................................................................................................ 7
LSM data* ..................................................................................................................................... 8
iSummary of the 2017Q4 consumer
confidence survey results
Consumer confidence remains depressed
Having slumped from -5 in the first quarter of 2017 to -9 during the second
quarter, the FNB/BER Consumer Confidence Index (CCI) remained low at -8
index points in the fourth quarter of 2017. The fieldwork for the fourth quarter
survey was conducted between 28 October and 4 December 2017 - i.e. before
the ANC National Conference took place in which Mr. Cyril Ramaphosa was
Consumer elected as the new president of the ANC.
confidence
No survey was conducted during the third quarter of 2017.1 The third quarter
remains low
data points in the charts and tables were imputed as the average of the second
and fourth quarters. For the overall CCI, the imputed value for the third quarter
is -9. This points to an overall CCI that remained relatively flat between the
second, third and fourth quarters of 2017. In the analysis and rest of the text,
we focus on the change between the quarters when the surveys were actually
conducted, namely the second and fourth quarters. The changes between the
quarters preceding and following the imputed third quarter are not analysed, as
this data point is not based on an actual measurement, but only serves to
prevent a break in the historical time series.
Figure 1: FNB/BER CCI remains in the doldrums
30
20
10
0
-10
-20
-30
-40
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16
Downturns shaded CCI Actual CCI Smoothed
Source: BER
2Although the CCI has averaged +4 since 1994, readings have varied between -3
and -15 since the beginning of 2015. The fourth quarter reading of -8 means
that the CCI has now been below the zero mark for three consecutive years - the
longest uninterrupted negative streak since the survey started in 1982.
The marginal increase in the CCI during the fourth quarter can be ascribed to a
substantial improvement in consumers' rating of South Africa's expected
Uptick in economic performance in 12 months' time. Having plunged from -1 to -22 index
expected points in the second quarter of 2017, the economic outlook index rebounded to -
economic 2 in the fourth quarter. In contrast, consumers' rating of the appropriateness of
performance the present time to buy durable goods deteriorated from -12 to a 17-year low of
-24 index points, while consumer sentiment regarding the outlook for their
household finances slumped from +6 to a 2.5-year low of +2 in the fourth
quarter of 2017.
The improvement in consumer sentiment regarding South Africa's economic
prospects correlates with the stronger-than-expected rebound in real GDP
growth during the second and third quarters of 2017. Following a technical
recession in the fourth quarter of 2016 and the first quarter of 2017, the South
Stronger growth
African economy expanded by a sturdy 2.8% quarter-on-quarter (q-o-q,
in mid-2017
seasonally adjusted and annualised) during the second quarter of 2017 and by
supporting CCI
another 2% q-o-q during the third quarter. Despite the depressing outlook
painted by Minister Gigaba for government finances in the Medium Term Budget
Policy Statement (MTBPS) and sovereign credit rating downgrades to sub-
investment grade (i.e. junk status) by Standard and Poor's and Fitch in 2017,
most economic analysts also expect domestic economic growth to improve
somewhat in 2018.
In contrast, the household financial outlook sub-index of the CCI retreated from
+6 in the second quarter to +2 in the fourth quarter of 2017. A breakdown of
the survey results per household income group shows that the financial outlook
index for low-income households (earning less than R 3 000 per month) plunged
Low-income
from -2 to -13 index points, the lowest reading in two and a half years. The
consumers still
financial outlook index for middle-income households (earning between R 3 000
struggling
and R14 000 per month) edged one index point lower to +4, but that of the
high-income group (earning more than R14 000 per month) improved from +12
1
To estimate the CCI, the BER uses respected market research companies to conduct personal interviews with 2 500
predominantly urban adults throughout South Africa every quarter. However, due to a lack of demand, none of the
service providers who conduct face-to-face interviews ran any surveys during the third quarter of 2017. The usual CCI
survey was run in the fourth quarter. The third quarter data points in the charts and tables were imputed as the
average of the second and fourth quarters.
3to +16 index points. (Figure 2 shows overall consumer confidence and not only
the household financial outlook).
Figure 2: Low income consumer feeling the pinch
30
20
10
0
-10
-20
-30
-40
96 98 00 02 04 06 08 10 12 14 16
High (R14 000+) Middle Low (households would also have benefitted from the 25 basis points cut in the prime
interest rate on 20 July 2017 (the first rate cut in 5 years), as well as a mighty
recovery in the JSE All Share index (from below 52 000 index points in June to
above 60 000 by November 2017).
The sharp deterioration in consumers' rating of the appropriateness of the time
to buy durable goods during the fourth quarter (from -12 in the second quarter
to a 17-year low of -24) is somewhat surprising and does not correlate with the
reported improvement in retail and car sales volumes towards the end of 2017.
According to Statistics South Africa, the growth in retail sales of furniture and
Uncertainty
household appliances rocketed from 1% year-on-year (y-o-y) in the second
weighing on
quarter to nearly 9% y-o-y on average in October and November (no doubt also
durable goods
boosted by record cut-price sales during Black Friday). Similarly, new car sales
purchases
growth jumped from -6% y-o-y in the second quarter to +6% in the fourth
quarter. Given that consumers tend to postpone purchases of big-ticket items in
times of uncertainty, it may well be that the great uncertainty about South
Africa's political and economic future that prevailed just prior to the ANC's
conference in December weighed on the time to buy durable goods sub-index of
the CCI.
At -8 index points, consumer confidence levels remained rather depressed during
the fourth quarter of 2017 (albeit above the recent lows of -15 registered in the
second quarter of 2015 and -10 in the fourth quarter of 2016). Low consumer
confidence levels point to a low willingness to spend among consumers, but
Low willingness
actual spending is also influenced by their ability to spend - as determined by
to spend among
their disposable income and access to credit. The bleak outlook for government
consumers
finances remains one of the greatest risks to consumer spending in 2018. With a
revenue shortfall of R50bn projected in the MTBPS and government debt now
expected to reach 60% of GDP by 2020, we expect further substantial increases
in personal income taxes and indirect taxes, as well as cuts in government
spending in the February 2018 budget. This will constrain the spending power of
middle- and high-income households in particular.
However, there have also been some positive developments since the fourth
quarter CCI survey. For one, the confidence-inspiring election of Mr. Cyril
Ramaphosa as the new president of the ANC - coupled with US dollar weakness
Positive
and stronger commodity prices - has seen the rand strengthen from R14.47 to
developments
the US dollar in mid-November of 2017 to closer to R11.90 in recent days. The
over December
considerable appreciation in the rand exchange rate should put further
to support CCI
downward pressure on consumer price inflation, bolstering the purchasing power
of households. Bar a sovereign credit ratings downgrade by Moody's at the end
5of March 2018, this might even open the door for the SARB to implement
another interest rate cut in the middle of the year.
Household credit extension also seems to have turned the corner, with growth
picking up gradually from very low levels since the middle of 2017. The current
optimism around the election of Mr. Ramaphosa could move the needle on
consumers' rating of the present time to buy durable goods in the positive
direction. Coupled with a sustained recovery in credit extension and lower prices
for imported durable goods on the back of the stronger rand, the outlook for
durable goods sales volumes in particular has improved. In addition, a potential
social grants crisis seems to have been averted with a deal that will see the SA
Post Office pay out social grants from April 2018. In all, a tightening in fiscal
policy will inhibit the recovery in household expenditure, but the growth in real
consumer spending is nevertheless projected to improve during 2018.
6Technical note
The consumer confidence results are derived from personal at-home interviews of an area-stratified
probability sample of 2 500 households. AC Nielsen conducts the surveys for the BER. The surveys cover
blacks and whites in metropolitan areas, cities, towns and villages throughout South Africa. Coloured and
Indian coverage include the major metropolitan areas. The total coverage represents 92% of the urban
adult population and 53% of the total adult population. A trained, experienced fieldworker uses a
structured questionnaire and conducts the interview in the home language of the respondent. A 35%
validation check is carried out personally or telephonically on the work of each interviewer. The consumer
confidence questions are always the first three questions of the questionnaire and only the head of the
household (male or female) is interviewed.
The following questions are asked:
1. How do you expect the general economic position in South Africa to develop during the next 12
months? Will it improve considerably, improve slightly, remain the same, deteriorate slightly,
deteriorate considerably or don’t know?
2. How do you expect the financial position in your household to develop in the next 12 months? Will it
improve considerably, improve slightly, remain the same, deteriorate slightly, deteriorate considerably
or don’t know?
3. What is your opinion of the suitability of the present time for the purchase of domestic appliances such
as furniture, washing machines, refrigerators etc. Do you think that for people in general it is the right
time, neither a good nor a bad time or the wrong time?
Consumer confidence is expressed as a net balance in contrast to business confidence, which is depicted
as a percentage gross. The net balance is derived as the percentage of respondents expecting an
improvement less the percentage expecting a deterioration. The answers of the first and second question
are weighted as follows: improve considerably (+10), improve slightly (+5), remain the same (0),
deteriorate slightly (-5) and deteriorate considerably (-10). The responses of the third question are
weighted in the following manner: right time to buy (+10) and wrong time to buy (-10). The composite
consumer confidence index is the average of the results of the above three questions.
7LSM data*
SAARF LIVING STANDARD MEASURES (LSM) SURVEY: JANUARY 2015 - DECEMBER 2015
LSM GROUP LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10
SIZE OF LSM GROUP (NUMBER
423 803 1 033 699 2 196 284 4 908 513 6 408 562 8 707 403 5 193 862 3 300 143 3 705 911 2 380 729
OF ADULTS)
LSM GROUP AS % OF TOTAL
1% 3% 6% 13% 17% 23% 14% 9% 10% 6%
POPULATION
POPULATION GROUP
Black 99% 99% 98% 98% 96% 86% 70% 58% 42% 30%
Coloured 1% 1% 2% 2% 3% 10% 16% 17% 16% 9%
Indian 0% 0% 0% 0% 0% 1% 3% 6% 8% 12%
White 0% 0% 0% 0% 0% 3% 10% 18% 33% 49%
AGE
15 - 24 19% 26% 27% 29% 28% 24% 23% 22% 22% 22%
25 - 34 16% 20% 20% 24% 25% 28% 26% 27% 22% 17%
35 - 49 19% 25% 24% 21% 23% 25% 26% 23% 27% 32%
50 or older 45% 29% 29% 26% 24% 23% 25% 27% 29% 30%
GENDER
14
Female 58% 56% 56% 52% 51% 51% 53% 51% 50% 47%
Male 42% 44% 44% 48% 49% 49% 47% 49% 50% 53%
COMMUNITY
Large urban (40 000 +) 0% 2% 8% 9% 30% 66% 80% 83% 84% 88%
Small urban and rural
100% 98% 92% 91% 70% 34% 20% 17% 16% 12%
DEMOGRAPHICS
(< 39 999)
HOME LANGUAGE
Most common home
Xhosa (62%) Zulu (49%) Zulu (32%) Zulu (31%) Zulu (28%) Zulu (24%) Afrikaans (22%) Afrikaans (27%) Afrikaans (32%) English (49%)
language
Second most common
Zulu (16%) Xhosa (28%) Xhosa (27%) Xhosa (18%) Xhosa (16%) Xhosa (16%) Zulu (18%) English (21%) English (31%) Afrikaans (27%)
home language
EDUCATION
No schooling 14% 3% 4% 3% 2% 1% 0% 0% 0% 0%
Primary completed 16% 18% 18% 11% 6% 5% 3% 2% 1% 0%
Matric 5% 12% 13% 27% 32% 40% 44% 42% 38% 31%
Tertiary 0% 0% 2% 1% 4% 9% 19% 30% 40% 55%
WORK STATUS
Full-time 13% 16% 19% 17% 23% 28% 33% 36% 40% 50%
Part-time 11% 10% 10% 9% 10% 9% 7% 7% 6% 5%
Not at all 76% 74% 71% 75% 68% 63% 60% 57% 54% 45%
MONTHLY HOUSEHOLD INCOME
Up to R1 400 44% 19% 21% 14% 10% 5% 1% 0% 0% 0%
R 1 400 - R 4 999 52% 65% 57% 56% 44% 31% 12% 6% 2% 0%
R 5 000 - R 10 999 3% 14% 21% 27% 38% 44% 38% 24% 13% 3%
R 11 000 - R19 999 0% 1% 1% 3% 7% 14% 30% 31% 25% 9%
R 20 000 and more 1% 1% 0% 0% 2% 5% 19% 38% 60% 88%
Shaded area: majority (%) of LSM group.
*
Please note: The All Media Products Survey (AMPS) survey, on which the information in the LSM tables is based, has been discontinued. The last dataset covers January – December
2015. At time of writing there exists no clarity regarding the commissioning of a new survey.LSM GROUP LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10
NON-DURABLE GOODS PURCHASING BEHAVIOUR
Shoprite (36%),
Shoprite (36%), Local Shoprite (52%), Pick 'n Pay (29%),
Local Supermarket Local Shoprite (56%), Shoprite (55%), Shoprite (40%), Pick 'n Pay (33%), Pick 'n Pay (32%),
Majority spend the Supermarket (16%) Spar (13%) and Shoprite (24%)
(25%), Shoprite (21%) Supermarket Spar (10%) and Pick 'n Pay (13%) Pick 'n Pay (22%) Checkers (16%) Checkers (20%) and
most money at and Boxer Boxer and Checkers
and Spar (14%) (14%) and Boxer Pick 'n Pay (6%) and Spar (10%) and Spar (10%) and Shoprite (13%) Checkers Hyper (10%)
Superstores (16%) Superstores (8%) (12%)
Superstores (14%)
SEMI-DURABLE GOODS PURCHASING BEHAVIOUR*
Mr Price (19%),
Pep Stores (23%), Mr Price (21%), Pep Jet (23%), Mr Price Jet (26%), Mr Mr Price (23%), Mr Price (23%), Mr Price (22%), Mr Price (17%), Woolworths (18%),
Majority purchased Edgars (13%) and
Woolworths (16%) and Stores (16%) and (15%) and Pep Price (21%) and Jet (23%) and Jet (17%) and Edgars (14%) and Edgars (15%) and Edgars (16%) and Mr
womens outerwear at Woolworths
Ackermans (12%) Flea Markets (8%) Stores (9%) Pep Stores (10%) Edgars (8%) Edgars (10%) Jet (13%) Woolworths (14%) Price (15%)
(10%)
Jet (29%), Ackermans
Pep Stores (49%), Pep Stores (36%), Jet Pep Stores (33%), Pep Stores (28%), Ackermans (27%), Ackermans (24%), Ackermans (22%), Woolworths (20%),
Majority purchased Ackermans (24%) (28%), Jet (27%)
Ackermans (10%) and Mr (26%) and Jet (21%) and Jet (28%) and Jet (19%) and Mr Mr Price (16%) Edgars (15%) and Edgars (19%) and Mr
children's clothing at and Pep Stores and Mr Price
SHOPPING HABITS
Price (3%) Ackermans (14%) Ackermans (19%) Ackermans (23%) Price (16%) and Edgars (15%) Woolworths (14%) Price (16%)
(21%) (14%)
Mr Price (19%),
Pep Stores (33%), Mr Mr Price (22%), Pep Jet (14%), Mr Price Mr Price (14%), Mr Price (18%), Mr Price (16%), Edgars (17%), Mr Edgars (18%), Mr Edgars (19%),
Majority purchased Edgars (14%)
Price (24%) and Flea Stores (18%) and Jet (7%) and Pep Jet (13%) and Jet (13%) and Edgars (15%) and Price (16%) and Price (15%) and Woolworths (17%)
men's clothing at and Truworths
Markets (10%) (15%) Stores (7%) Edgars (12%) Edgars (10%) Truworths (13%) Markham (14%) Markham (13%) and Mr Price (12%)
15
(12%)
DURABLE GOODS PURCHASING BEHAVIOUR**
Majority purchased Shoprite (26%), Shoprite (37%), Shoprite (39%), Shoprite (37%), Shoprite (26%), Game (21%), Game (27%), Clicks Game (28%), Clicks
Shoprite (33%) and
small electrical Shoprite (34%) Pep Stores (12%) Pep Stores (4%) Game (9%) and Game (12%) and Game (15%) and Shoprite (14%) (11%) and (12%) and Checkers
Pep Stores (8%)
appliances at and Jet Mart (6%) and Jet Mart (3%) Pick 'n Pay (5%) Pick 'n Pay (7%) Checkers (7%) and Clicks (10%) Checkers (8%) (8%)
Other outlet Other outlet Other outlet Other outlet Other outlet Game (23%),
Game (30%), Other Game (27%), Other
Majority purchased Other outlet (66%) (82%), Gift (9%) (86%), Game (4%) (64%), Game (38%), Game (26%), Game Other outlet
outlet (13%) and outlet (16%) and
large appliances at and Gift (31%) and Joshua Doore and OK Furniture (10%) and Lewis (12%) and OK (25%) and Lewis (17%) and OK
Makro (9%) Makro (15%)
(3%) (3%) (5%) Furniture (9%) (6%) Furniture (10%)
Other outlet Other outlet Other outlet Other outlet Other outlet Other outlet Other outlet (19%),
Other outlet (18%),
Majority purchased Other outlet (60%) (40%), Lewis (15%) (28%), Lewis (22%), Fair Deal (17%), Lewis (23%), Lewis (15%), Lewis House and Home
Lewis (100%) House and Home
furniture at and Lewis (21%) and Joshua Doore (12%) and Joshua (7%) and (12%) and OK (11%) and Game (10%) and Game (13%) and Game
(10%) and Game (7%)
(13%) Doore (11%) Ellerines (5%) Furniture (8%) (9%) (9%) (9%)
* Purchases (excluding shoes) within three months prior to the survey being taken.
** In the past 12 months.LSM GROUP LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10
HOUSEHOLD OWNERSHIP OF:
Car 0% 4% 4% 4% 11% 21% 51% 77% 91% 99%
POSESSION OF DURABLE GOODS
Cellphone 57% 74% 78% 83% 88% 89% 92% 95% 96% 98%
TV 0% 23% 59% 86% 94% 97% 98% 99% 99% 99%
Hi-Fi / Music Centre 0% 11% 25% 38% 49% 51% 60% 62% 68% 72%
Desktop computer 0% 0% 0% 0% 0% 2% 10% 23% 35% 48%
Personal laptop
0% 0% 0% 0% 1% 6% 19% 45% 61% 86%
computer
Refrigerator 0% 15% 57% 81% 91% 96% 98% 98% 99% 100%
Electric stove 0% 0% 8% 32% 58% 84% 97% 98% 98% 98%
Dishwasher 0% 0% 0% 0% 0% 0% 1% 2% 7% 38%
Washing machine 0% 0% 0% 1% 11% 25% 28% 18% 10% 5%
Tumble dryer 0% 0% 0% 0% 0% 1% 6% 10% 21% 52%
Capitec (24%), Capitec (26%), Capitec (27%), Absa (25%), FNB Absa (28%), FNB
Standard Bank (27%), Capitec (26%), Absa Capitec (26%), Absa (25%), FNB (32%), Absa
Standard Bank Standard Bank Absa (24%) and (25%) and (26%) and
Main bank Absa (27%) and Capitec (25%) and Standard Absa (23%) and Capitec (23%) (28%) and Standard
(23%) and FNB (24%) and Absa Standard Bank Standard Bank Standard Bank
(18%) Bank (19%) FNB (20%) and FNB (20%) Bank (19%)
(21%) (24%) (21%) (21%) (19%)
FINANCIAL SERVICES
Have retail store card 3% 2% 8% 10% 20% 29% 44% 55% 59% 73%
Have bought durable
1% 0% 1% 1% 2% 2% 2% 2% 3% 3%
goods on credit
16
Have or make use of a
27% 36% 39% 46% 53% 61% 67% 70% 65% 64%
savings account
Have life cover 0% 0% 1% 0% 1% 4% 9% 15% 24% 40%
Have a short-term
0% 0% 0% 0% 0% 1% 3% 6% 15% 34%
insurance policy
Membership of a medical
0% 0% 1% 1% 1% 6% 14% 26% 42% 64%
aid scheme
DSTV subscription 0% 0% 2% 7% 21% 36% 60% 70% 79% 90%
OTHER
M-Net subscription 0% 0% 0% 0% 0% 2% 11% 23% 40% 66%
Bought hardware or
0% 2% 5% 5% 6% 8% 12% 15% 18% 29%
buidling supplies**
** In the past 12 months.
Source: All Media Publication Survey Database (Database: AMPS2015B)You can also read
