SA consumer mood subdued despite partial recovery

South African consumer confidence remained subdued in fourth quarter even after a partial recovery as the easing of restrictions aimed at curbing the spread of the coronavirus pandemic allowed more people to get back to work.

A quarterly index measuring sentiment rose to -12 from -23 in the three months through September, FirstRand’s First National Bank said in an emailed statement Monday. Despite the improvement, festive season sentiment is at the weakest since 2015, and is below the average consumer confidence reading of 2 since 1994.

The level of recovery in sentiment across income groups diverges, with higher-income categories lagging. That could suggest a slow recovery in consumer spending. Household consumption expenditure accounts for about 60% of gross domestic product.

Confidence levels among low-income households that earn less than R2 500 ($166) per month rebounded the most, while that of consumers earning more than R20 000 per month gained the least and remains depressed compared with a year earlier, according to the lender.

“The fact that the confidence levels of affluent consumers — the group with the largest spending power — are still so depressed points to a more muted recovery in overall consumer spending during the fourth quarter compared to the noticeable jump witnessed in the consumer confidence index,” said FNB chief economist Mamello Matikinca-Ngwenya.

Low-income consumers who were unable to work from home benefited from the easing of virus restrictions and uptick in activity, as well as extended social-relief programs from the government, she said. The upcoming end of temporary welfare measures, a resurgence in infections and possible tightening of regulations could weigh on consumer sentiment into the new year, Matikinca-Ngwenya said.