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Latest MasterIndex™ of Consumer Confidence Reveals Continued Challenge for Australia in the First Half 2007
Australian Consumer Confidence Continues to Fall as Australians Want More Out of Life
Sydney, 1 February 2007 - Australia's consumer confidence has dropped for the sixth consecutive half year, slumping to the lowest point since the second half of 2003, according to the latest MasterIndex™ of Consumer Confidence by MasterCard Worldwide. The latest fall is caused by Australians' more pessimistic outlook on their quality of life, which is down almost 25 points from this time last year, and comes despite improvements in confidence in the stock market and employment. The six-monthly index reveals that Australians remain strongly optimistic about regular income but this optimism has fallen slightly from 73.3 to 71.1. And although stock market confidence has remained slightly optimistic at 57.1, confidence in employment outlook and the wider economy remains pessimistically low at 36.1 and 36.0 respectively. However, it is quality of life that has dragged the overall index down in Australia, falling from 39.5 six months ago to 25.5. This is its lowest point since 2H 1998 and is in stark contrast to its all-time high of 81 in the first half of 2004. "It would seem that Australians are looking beyond their regular income when assessing satisfaction in life and are being increasingly influenced by time spent with family and friends and their work life balance, which are the key factors in the quality of life outlook," said Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide. "Australia's stable economy over the past ten years and current low unemployment rate has enabled Australians to focus on enhancing their quality of life, placing greater importance on the non-financial and non-work related factors when examining their happiness. While repeated increases in interest rates, combined with recent high fuel prices, would have curtailed Aussies' ability to spend on lifestyle and leisure activities, Australia is renowned for its ability to offer a low-cost outdoor lifestyle. "A plausible explanation of the significant fall in the outlook on quality of life, in spite of a strong outlook in personal income, could be Australians' higher expectation today in wanting more out of life; but finding it more difficult to achieve due to the demand for longer working hours and more intense competition in the job market," added Hedrick-Wong. Overall consumer confidence fell slightly from 46.5 in the latter half of last year to 45.3, but dropped 4.5 points from this time last year. The index previously dipped to 45.3 in 2H 2003 but the historical average, calculated since the index began in 1993, lies significantly higher at 56.5. The sentiments of the supposed 'lucky country' are in stark contrast to the optimism of the rest of the Asia/Pacific region, which remains fairly upbeat for the first half of 2007. Consumer confidence has risen from its low six months ago, increasing from 57.4 to 64.3. Consumers are most optimistic about Regular Income (75.4), followed by the Economy (62.4), Stock Market (61.7), Quality of Life (61.7) and Employment (60.4). From a regional point of view, factors likely to have contributed to an improved consumer sentiment include the decline in crude oil prices and strong performance of the stock markets. Country-specific factors include the election of a new prime minister in Japan and its highly positive Tankan1 reports on business confidence, and the ousting of the former prime minister in Thailand. Notably, ten of the 13 Asia/Pacific markets have seen an improvement in their consumer confidence levels from six months ago. Vietnam continues to be the most optimistic market (93.7), followed by Hong Kong (88.8), Singapore (82.5) and China (81.2). This positive outlook of consumer confidence for the first half of 2007, however, has to be viewed in the context of a widely expected slowdown in growth in the US, and possibly China, two key drivers of exports for Asia. "Many markets across Asia/Pacific are still heavily dependent on exports. Net exports have contributed more than domestic demand to economic growth in recent years in most Asian markets. There is a need to build a more robust domestic sector. Consumer sentiment is fairly optimistic in 1H 2007 but things might change quickly in the second half of the year if growth slows sharply in the US, leading to a decline in export demand for Asia," said Dr. Hedrick-Wong. The latest MasterIndex survey, the region's most comprehensive and longest running consumer confidence survey, was conducted from 11 October to 30 October 2006 and involved 5,405 consumers across 13 key Asia/Pacific markets. In its fourteenth year, the bi-annual survey analyses prevailing consumer perceptions of economic conditions for the six-month period ahead. The scores ranging between 0 and 100 are based on responses on five variables: Employment, Economy, Regular Income, Stock Market and Quality of Life. Other highlights of the 1H 2007 MasterIndex of Consumer Confidence survey include:
MASTERINDEX COUNTRY FINDINGS
Australia (45.3) Consumer sentiments in Australia are currently slightly pessimistic. Its MasterIndex at 45.3 is marginally lower than six months ago (46.5) and a year ago (49.8), and significantly lower than its Historical Average MasterIndex of 56.5. While optimistic about Regular Income (71.7) and somewhat optimistic about the Stock Market (57.1), consumers are pessimistic on Employment (36.1), Economy (36.0) and Quality of Life (25.5). China (81.2) Consumer sentiments in China remain very optimistic. Its current MasterIndex of 81.2 is slightly higher than six months ago (78.2) and its Historical Average (74.0), but marginally lower than a year ago (82.3). Chinese consumers remain highly optimistic on the Economy (92.7), Quality of Life (91.5) and Regular Income (88.5), and optimistic about Employment (72.3). Stock Market sentiments (61.0) have also improved from a year ago. Hong Kong (88.8) Hong Kong's current MasterIndex of 88.8 is near record high for the market (as it is not statistically higher than the previous record high of 88.5 of period ago). The year ago MasterIndex is 85.8 and the Historical Average is just 53.3. Consumers continue to be very optimistic on Employment (93.5), Economy (93.9) and Regular Income (94.4). Outlook on Quality of Life (85.4) and the Stock Market (76.7) continue to be positive as well. Indonesia (62.5) Unlike six months (42.4) and a year ago (39.0), Indonesia consumers are now more optimistic (62.5). Consumers are optimistic on Regular Income (86.3) and the Stock Market (71.1), but are only slightly optimistic about the Economy (60.2). They are still pessimistic towards Employment (49.8) and Quality of life (45.0), even though they view these much less negatively than six months and a year ago. The current MasterIndex is slightly below the market Historical Average of 66.6. Japan (68.3) Consumer confidence in Japan has in the last three consecutive surveys been optimistic. Its current MasterIndex of 68.3 is just marginally below six months ago (68.9) and higher than a year ago (63.0), when Japanese consumers first turned optimistic since the inception of the MasterIndex in October 1993. Japanese consumers are optimistic on Employment (79.7), Economy (78.5) and the Stock Market (77.1), and slightly optimistic on Quality of Life (57.8). However, current outlook on Regular Income (48.3), unlike six months and a year ago (61.4 and 61.7 respectively), is marginally pessimistic. Japan's current MasterIndex of 68.3 is two and a half times stronger than the market's Historical Average of 28.2. Korea (29.3) Consumer sentiments (29.3) remain the lowest in the region, as it was six months ago. While sentiments have improved marginally from six months ago (28.1), it is considerably below a year ago (47.5) as well as the market Historical Average of 52.2. It is the fifth lowest in the market's MasterIndex history. Consumer sentiments on Employment (14.2) and Economy (15.8) are extremely pessimistic, and while sentiments on Stock Market (39.7), Quality of Life (30.1) and Regular Income (46.7) are less so, they are still in the pessimistic range. Malaysia (37.5) Consumer confidence in the last MasterIndex for 2H 2006 (51.4) showed a significant decline from the previous six months (68.7) and a year ago (61.4). Consumer confidence has dipped further this time round, turning pessimistic (37.5) and well below the market’s Historical Average of 74.2. The current MasterIndex is the third lowest since the survey started in 1993, with such low levels of confidence seen only during the Asian Financial Crisis. Malaysian consumers are pessimistic on all the five economic factors - Regular Income (31.9), Stock Market (35.7), Economy (39.2), Quality of Life (39.8) and Employment (41.1). New Zealand (61.0) New Zealanders have become more optimistic than six months ago (45.2) and a year ago (42.5). Its MasterIndex of 61.0 signals a return to cautious optimism, with improvements on the Economy (51.0 vs. 25.2 six months ago), Stock Market (55.2 vs. 28.7 six months ago), Employment (61.0 vs. 42.7 six months ago). Outlook on Regular Income (84.3 vs. 85.8 six months ago) continues be quite optimistic. The current MasterIndex of 61.0 is slightly ahead of the market’s Historical Average of 58.8. Philippines (57.2) Consumer confidence in the Philippines has recovered from the very low levels in 2005, and has turned marginally optimistic. The current MasterIndex (57.2) is a further improvement from six months ago (51.9) and a year ago (28.9), and is above its historical average (49.1). While consumers are overall optimistic, they are however still uncertain about the Economy (46.7), Employment (45.0) and Quality of Life (42.8), where sentiments are still slightly pessimistic. Singapore (82.5) Current consumer sentiments in Singapore are very optimistic. Its MasterIndex of 82.5 is a further improvement in consumer confidence, and is significantly stronger than six months ago (73.9), a year ago (74.8) and the market Historical Average (65.2). Consumers are very optimistic about Employment (86.1), Quality of Life (84.8), Economy (83.9), Regular Income (81.1) and to a slightly lesser degree, the Stock Market (76.6). Taiwan (30.8) Consumer confidence in Taiwan (30.8) is marginally higher than six months ago (29.1) and improves from a year ago (26.6). Its current MasterIndex of 30.8 however demonstrates continued pessimism as confidence on four of the five economic factors - Regular Income (31.3), Economy (28.4), Employment (25.3) and Quality of Life (24.1) is still low. Sentiments towards the Stock Market (44.7) are less negative but nevertheless still pessimistic.
Taiwan's current MasterIndex of 30.8 is well below the market's Historical Average of 48.5, and the second lowest among the 13 markets surveyed for 1H 2007. Thailand (65.1) Consumer sentiments in this market (at 65.1) have recovered significantly from the last survey, where its MasterIndex score (28.6) was the lowest since the Asian Financial Crisis of 1997/98. Currently, Thai consumers are somewhat optimistic on all five economic factors. The current MasterIndex is significantly ahead of the market's Historical Average (56.1). Current consumers' outlook on Regular Income (77.0), Economy (64.8), Quality of Life (62.5) and Employment (62.4) is fairly optimistic, and significantly higher than both six months and a year ago. Stock Market (58.7) sentiments are slightly optimistic. Vietnam (93.7) Consumers in Vietnam continue to be very optimistic and confidence in this market is at an all-time high (93.7). Confidence has increased even more from six months ago (89.6), and a year ago (93.1), beating its Historical Average (91.4). Sentiments on Employment (91.6), Economy (95.9), Regular Income (94.5) and Quality of Life (98.7) and the Stock Market (87.8) are very positive.
More information on MasterIndex can be found at the website www.masterintelligence.com About the MasterCard MasterIndex™ of Consumer Confidence
The MasterCard MasterIndex™ of Consumer Confidence survey has a 14-year track record of consumer confidence indices collected from more than 131,000 interviews, unequalled both in scope and history across Asia/Pacific. The MasterIndex of Consumer Confidence is the most comprehensive and longest running survey of its kind in the region. It has demonstrated its precision at several important junctures as a barometer of consumer sentiment. In June 1997, MasterIndex revealed a decline in consumer confidence – one month prior to the devaluation of the Thai baht that triggered the regional financial crisis. More recently in June 2003, MasterIndex for employment in Hong Kong dropped to a low of 20.0. This was subsequently reflected in Hong Kong’s unemployment rate, which peaked just before Sept 2003 at 8%. The survey began in Quarter 2 of 1993 and has been conducted twice yearly since. Thirteen markets participate in the survey: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam. Vietnam made its debut in the December 2003 report, replacing India, which is now covered by the SAMEA (South Asia/Middle East/Africa) MasterIndex survey. The last Asia/Pacific MasterIndex survey was conducted from 11 October to 30 October 2006 among a sample of approximately 400 (total sample of 5,405) across the middle and upper income groups in each market, except in China where approximately 600 respondents were surveyed. The MasterIndex is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: employment, the economy, regular income, stock market and quality of life. The responses are consumers' thoughts on the six months ahead (i.e. January to June 2006). Data collection was via personal and telephone interviews with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four percentage points at the 90% confidence level. The chart below shows the performance of each market at different key intervals and important turning points in the history of the MasterIndex of Consumer Confidence. About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard Worldwide serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercardworldwide.com. Contacts:
Eugenia Koh, 6825 8029, ekoh@webershandwick.com
Note: The Crisis period in the chart above is based on the reflection of the MasterIndex™ of Consumer Confidence results, which may or may not coincide with actual chronology or the definitions of others. Historical Average is the mean average of all MasterIndex scores up through Period Ago but not including the Current Period. * The average excludes Vietnam as this market was not surveyed in 1997/98. Contacts:
Melissa Devine, 02 9818 0950, mdevine@ppr.com.au
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