The steady rise in consumer confidence since Q1 2012 reflects an outlook of cautious optimism, says Nielsen.
Global consumer confidence has further improved in the third quarter (Q3), according to The Nielsen Consumer Confidence Index.
Global consumer confidence has edged up one index point to a score of 98 – up one point from the Q2 and two points from the start of the year – it now just two points shy of the optimism baseline of 100. The index, which has been on a slow and steady rise for two and a half years (since Q1 2012), has now exceeded a pre-recession level of 94 for three consecutive quarters.
The latest results reflect an outlook of cautious optimism, as every region’s consumer confidence score improved from the previous quarter, says Nielsen in its Global Survey of Consumer Confidence and Spending Intentions report published last week.
Consumer confidence in the North America improved most, rising four points to 107, a score that matches Asia-Pacific’s score for the first time in Nielsen’s Consumer Confidence history (since 2005); Asia-Pacific’s score increased one point. Confidence also increased three points in the Middle East/Africa (96), one point in Latin America (91) and one point in Europe (78), from the previous quarter.
The Nielsen consumer confidence index measures perceptions of local job prospects, personal finances and immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access in 60 countries.
“Outside of North America, a range of region- and country-specific factors are translating into weaker and more uneven improvements in consumer confidence,” said Dr. Louise Keely, senior vice president, Nielsen. “Europe is being directly affected by the geopolitical crisis in Ukraine, and is also at a critical policy juncture concerning steps to prevent deflation and improve growth. Among major emerging economies, India is displaying renewed potential for accelerating growth from its new government while China is moving in a different direction as it reorients its economy toward greater domestic consumption.”
In the latest online survey, conducted Aug 13-Sept 5, 2014, consumer confidence increased in 39 of 60 markets measured by Nielsen (65%), compared with 31 markets (52%) in the second quarter.
Among the world’s biggest economies, consumer confidence increased four points in the U.S. (108), one point in Germany (97), three points in the U.K. (93) and four points in Japan (77), from the second quarter. Consumer confidence was highest in India at 126 points, albeit down two points from Q2, while China’s held steady at 111 for the fourth consecutive quarter.
Consumer confidence in Asia-Pacific increased in 71% of the markets measured, as 10 of 14 countries posted increases, three declined and one was flat, compared to the second quarter. Nine of 14 countries in the region reported index scores above the baseline of 100. Confidence in Malaysia increased six points to 99, a breath away from the baseline.
Just over half of global respondents (52%) believed the job market would be good or excellent in the next 12 months, a 2 percentage-point (ppt) increase from the second quarter. This modest increase follows steady but small upticks reported during the past five years since 2009 when employment sentiment dropped to an average annual low of 31% during that year.
While perceptions of personal finances have become more positive since 2009, consumers’ overall sentiment about personal finances has not improved as significantly as their sentiment about their employment opportunities. Some 57% of global respondents rated their personal finances as good or excellent for the upcoming year, compared to the average annual low reported in 2009 of 46%, an 11ppt increase. By contrast, the sentiment for job prospects increased 21ppt over the same time period.
“A longer-term trend has been the divergence between the economic fortunes of the middle class in developed markets and those in emerging markets,” said Dr. Keely. “In the US and Western Europe, the middle class has been structurally weakened while the low-wage sector has grown. There is also a growing divide between younger and older people, especially within Europe, with the former experiencing high rates of unemployment and underemployment. By contrast, the middle class grew strongly in emerging markets during the previous decade, and while that trend has recently slowed, it can still be expected to continue. Going forward, these disparities within and across countries can be expected to have a large impact on the overall level and patterns in discretionary spending.”
Positive perceptions for local job prospects increased in several regions in the past 12 months: 9ppt in North America to 55%, 7ppt in Asia-Pacific to 66%, 6ppt in the Middle East/Africa to 46% and 5ppt in Europe to 31%. Conversely, Latin America was the only region with a decline in job sentiment, dropping 8ppt since third quarter 2013 to 34%.
North Americans were most confident in the state of their personal finances, as expressed in a rise of 2ppt from the previous quarter to 65%, followed by Asia-Pacific (63%), Latin America (61%) and the Middle East/Africa. Europeans were least confident in their personal finances at 38%, down 1ppt from the previous quarter.
Considering that more than half of global respondents (54%) believed their country was in recession in the third quarter, it’s understandable that many still maintain cautious-about-spending attitudes. A recessionary sentiment was strongest in many European countries. More than three quarters of respondents in 12 of 32 European countries felt their country was in recession.
Spending perceptions for the next 12 months improved marginally in the third quarter in all regions except Asia-Pacific, which was flat (43%) with the second quarter.
Global discretionary spending/saving intentions in Q3 were flat across most categories, with marginal 1ppt gains for saving spare cash (49%), for saving for retirement (12%) and for spending on holidays/vacations (36%). About one-third plan to spend on new clothes (34%) and out-of-home entertainment (31%), both unchanged from Q2. One-fourth intends to spend on new technology (down 2ppt) and pay off debts/credit cards/loans (flat from Q2). About one-fifth expect to spend on home improvements (22%) and invest in stock/mutual funds (20%), down 1ppt each Q2.
More than six out of 10 Asia-Pacific respondents (62%) made saving a priority in the third quarter—20ppt higher than in North Americans (42%) and double or almost double those of Latin America (31%), Europe (36%) and the Middle East/Africa (39%).
Note: While an online survey methodology allows for tremendous scale and global reach, it provides a perspective only on the habits of existing Internet users, not total populations. In developing markets where online penetration is still growing, audiences may be younger and more affluent than the general population of that country. In addition, survey responses are based on claimed behaviour rather than actual metered data.