Those who are highly skilled, unionised or work in the public sector, regardless of income level, are remarkably confident and rate their financial prospects as very good, indicating that despite the financial crisis many South Africans are doing well.
FNB chief economist Cees Bruggemans said yesterday that an overwhelming lack of confidence would be expected, with credit access severely affected by the global financial crisis and the National Credit Act, along with high household debt and unemployment.
“Instead, society appears to fragment in some rather extreme factions, (with) some highly penalised by events, but others very favoured,” he said.
Those who were enjoying the benefits seemed to be the greater majority and were presumably determining the spending outcomes, he said. Those enjoying “political protection and largesse” included 1.5 million public sector workers and 15 million grant recipients. Also benefiting were those with talent, exceptional business acumen, scarce professional skills or membership of powerful trade unions.
But those who work for small businesses or have few skills are benefiting far less from the current economic climate.
This emerged from the release yesterday of the FNB/BER consumer confidence index that shows an increase to 11 in the second quarter from 9 in the first quarter. This is below the 14 registered last year, but is still relatively high given that the index averaged 6 during the previous cyclical upturn between 2000 and 2007.
The index combines the results of three questions posed to 2 500 mostly urban adults between May 18 and June 6. They were asked about expected economic performance, expected financial situation of households and whether it is a good time to buy durable goods.
All income categories are upbeat, with those earning less than R2 000 a month registering 8, middle-income earners at 10 and those taking home more than R10 000 a month at 16.
But the index also shows relative low confidence expressed about whether now is a good time to buy durable goods, with a minus 5 in the second quarter from minus 4 in first quarter. Bruggemans said reluctance to spend could be due to an awareness of looming interest rate hikes.
But Standard Bank economist Nomvuyo Guma said that consumers’ reluctance to buy durable goods was not borne out in the national accounts data, which showed household expenditure on durable goods rose 21.5 percent quarter on quarter in the first quarter. – Business Report