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Consumer confidence in South Africa ends record plunge and rises slightly in May

Updated: Sep 14

  • KASI consumer-sentiment index rose 3.6% percentage points in May from -84 to -81

  • Stimulus and partial reopening have boosted optimism about a general economic recovery

  • Depressing job market sentiment continues to weigh heavily on discretionary spending

May 2020 Release: The month of May saw a +3 point increase in the consumer confidence index score from its July value of -84. Across the 7 countries that participated in the survey, South Africa has shown the least improvement. This is not surprising in light of its higher Covid-19 case count and stricter lockdown. Despite the improvement, customers are increasingly decoupling their personal financial conditions from their view of the general economy. 

Partial reopening and government stimulus has improved sentiment but customers are yet to see the benefits

While the index of current conditions (ICC) improved by 2 points, a 2.1% improvement, the index of consumer expectation (ICE) rose even faster at 3.8% with a 3 point gain. This implies that customers becoming more optimistic about future economic conditions have a greater weightage in the CCI improvement seen in May. Despite the uptick in the CCI this month, it is still 2 points lower than at the beginning of the COVID-19 pandemic. This has mainly been due to a 6 point fall in ICC from March compared to the ICE, which has rebounded to their previous levels. The improvement in the ICE reflects how households are reacting positively to the government's $26 billion stimulus plan and the partial reopening of the economy as the county moved to lift its first stage in a five-stage reopening plan on May 1st.

Despite greater household confidences on meeting expenses, the outlook for discretionary spending is still muted

A 4.7% increase in confidence in the ability to meet future household expenses was observed in the month of May. This was a 4 point increase in comparison to the previous month and can largely be attributed to the partial easing of the lockdown that began on May 1st, allowing 1.5 million workers to return to work. Furthermore, large government benefits such as the Covid-19 Temporary Employee/Employer Relief Scheme (C19 TERS) will help many households stay afloat during the pandemic. Despite these interventions due to the financial uncertainty caused by the Covid-19 crisis the number of customers planning to make large purchases has improved by only 1 point from -94 to -93. This shows us that due to the uncertainty caused by Covid-19, households are prioritizing essential goods and canceling or delaying large purchases to save more money.

Customers continue to be pessimistic that they personally will benefit in the recovery

In spite of customer sentiment on future job prospects improving by 2 points this month, households are still the most pessimistic about the future job market which currently stands at - 95. In contrast, customers’ future economic expectations saw a 5 point increase reaching a less negative value of - 70. This reflects South Africa's long struggle with high unemployment due to long-standing inequalities and structural barriers. Even before Covid-19 induced economic crisis, South Africa was struggling to absorb all the workers entering its workforce and suffered a recession in 2019 with unemployment reaching 29.1% in the fourth quarter of 2019. This severely depressed outlook on future employment is a reflection that many expect the current economic crisis will exacerbate the economic inequalities already present in South Africa.

By Shahzan Wani, Economic Intelligence Group at KASI.


About the methodology

KASI Consumer Confidence Score (KASI CCI) is a composite index compiled from a seven-question survey that runs monthly via our consumer polls in the countries covered. The data output is based on a fresh, randomly selected representative sample of city dwellers aged 18-64. Released the first week of every month, KASI CCI provides a focused view on consumer perceptions in seven African urban centers (Ghana, Nigeria, Kenya, South Africa, Cameroon, Ivory Coast, Tanzania) where most spending in the continent is concentrated.

For each question, the final metric will be a ‘balance measure’ of the percentage of positive responses minus the percentage of negative responses. The overall metric will be an average across all the questions.


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