The SA Daily
05 November 2019
Consumer confidence cools
Shireen Darmalingam
- The Bureau for Economic Research (BER) Q3:19 consumer confidence index is due out this morning. The index had increased marginally to 5 pts in Q2:19, from 2 pts in Q1:19 as consumer confidence regarding the economic outlook improved. However, the rating of the present time to buy durable goods fell further into negative territory, putting pressure on the overall index.
- Eskom power cuts in Q1:19 were particularly severe, damaging confidence in that quarter and also souring sentiment about both the SA economy and financial sub-components of the BER’s confidence index in Q2:19. The index is now well below the recent peak of 26 pts in Q1:18. Consumers were more upbeat then, with sentiment soaring on “Ramaphoria” as well as the president’s intended reform agenda.
- Bloomberg consensus now foresees a further deterioration in confidence to 3 pts in Q3:19. After the promising Q2:19 elections, consumers have had little else to prop up confidence. The global economy slowed further, with central banks acting in response. Both developed and developing markets started cutting interest rates. The SARB too cut rates, by 25 bps in July, citing trade tensions and the impact on sentiment and investment as a key concern as well as geopolitical developments and soaring corporate and sovereign debt. These key risks and Eskom’s debt have kept consumer confidence, and business confidence in the doldrums. SA unemployment is now its highest level in 11 years, per Q3:19 numbers. The recent MTBPS with its far worse fiscal outlook, government’s cumbersome and lengthy turnaround plan for Eskom, as well as Moody’s changing the outlook to negative from stable will offer little respite to confidence.
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