Relieved consumers want to spend more
CONSUMERS are gradually becoming more willing to part with their extra cash, a survey revealed yesterday.
The Bureau for Economic Research said consumer confidence index rose by three points in the second quarter to four points.
In March the index, which is compiled by FNB and has in the past gone as high as 23 points (out of 100), recorded its first positive score after tracking negatively for the last three quarters of 2008.
At first glance the latest rise came as a surprise in light of recent Reserve Bank data which revealed falls in consumer spending and real personal disposable income during the first quarter of 2009, the index report said.
FNB chief economist Cees Bruggemans said: "The main reason for the significant up-scaling in expectations is the dramatic cut in the interest rate.
"The April election outcome, promises of jobs, the increase in social grants, the recovery in share prices and the strengthening of the rand probably also convinced many consumers that the economy will perform better in a year's time."
The index is also coming from a low base, with the second quarter of last year seeing the biggest fall since the 1980s from 12 points to negative six points.
About 2500 people are asked two questions about the future and one about the present as part of the survey.
Consumers are quizzed on their expectations about the economic performance and their own finances in 12 months' time and the appropriateness of the present time to buy durable goods.
Yesterday the Reserve Bank released private sector credit extension figures for May, which showed a slowing of demand to 5,7 percent year-on-year - its slowest pace in five years - from 8,47 percent in April.
Economists expected growth of 8 percent.
The lower-than-expected number was due to a sharp monthly fall in the other loans and advances category as well as instalment sales and leasing finance
Other loans and advances, which include credit cards and overdrafts, dropped by R26billion or 4,8 percent.