28 July 2006
Consumer confidence in New Zealand is on the increase but still has some way to go before it fully recovers, according to the MasterIndex of Consumer Confidence released today by MasterCard.
The six-monthly survey measures how optimistic people feel about the six months ahead and has been conducted across the Asia Pacific region for 13 years. It found that New Zealanders are feeling more positive than they did in the last survey. New Zealand’s current MasterIndex of 45.2 shows a slight improvement compared to six months ago (42.5) but is well below the figure of a year ago (52.5) and is also lower than the national historical average of 59.4.
Consumer sentiment on all five economic factors measured as part of the research showed no major shifts however there has been a slight increase in some areas. Kiwis are feeling more positive about the economy (25.2 vs. 22.2) quality of life (43.5 vs. 38.8) and regular income (85.8 vs. 78.8) but they’re less optimistic about employment (42.7 vs. 42.8) and the stock market which measured at 28.7 compared to 29.8 six months ago.
The New Zealand consumer confidence figure is also well below the Asia/Pacific figure of 57.4.
Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide said there is a strong correlation between consumer confidence, interest rates and household consumption and the fact that domestic consumption is set to weaken and interest rate rises are expected across most of the Asia/Pacific is contributing to an increase in consumer confidence across the region.
“Overall the volatility in the global equity market, concerns over inflation and high world oil prices form the backdrop to the current consumer confidence figures.
“New Zealand, like many other Asia/Pacific regions, has failed to recover to previous confidence levels, which in part can be attributed to the prospect of rising interest rates, increasing oil costs and continued unrest in the Middle East,” he said.
While there has been a slight increase in New Zealand’s consumer confidence, the Australian figure (46.5) has instead declined from six months and a year ago to a level that is below the market’s historical average.
Amid the record lows in the region Hong Kong and Japan showed extremely high levels of consumer confidence, with the figures at 88.5 and 68.9 respectively.
The latest MasterIndex survey, the region’s most comprehensive and longest running consumer confidence research, was conducted from 15 May to 1 June 2006 and involved 5,401 consumers across 13 key Asia/Pacific markets.
In its thirteenth year, the bi-yearly survey analyzes prevailing consumer perceptions of economic conditions for the six-month period ahead. The scores range from 0-100 and are based on responses on five variables: employment, economy, regular income, stock market and quality of life.
Other highlights of the latest MasterIndex of Consumer Confidence survey are:
MASTERINDEX COUNTRY FINDINGS
Australia’s consumer confidence (46.5) has declined from six months and a year ago to a level that is below the market’s historical average. Except for the positive sentiments on Regular Income (73.3), outlook on all other the economic factors is pessimistic.
Compared to six months ago and a year ago, Australian consumers are currently less positive on Employment (32.8 vs 44.9 six months ago vs 53.5 year ago respectively) and Quality of Life (39.5 vs 50.4 six months ago vs 52.5 year ago).
China (78.2) seems to have cooled down slightly due largely to a substantial decline in sentiments on Employment even despite a significant improvement in the outlook for the Stock Market. Its current MasterIndex of 78.2, supported by a very optimistic outlook on the Economy, Quality of Life, Regular Income and fairly positive Stock Market sentiments, clearly shows that consumers in this market continue to be very optimistic about the next six months.
Sentiments on the Economy (91.1 vs 92.6 six months ago vs 95.4 year ago), Quality of Life (87.9 vs 93.8 period ago vs 95.6 year ago) as well as those on Regular Income (86.5 vs 92.4 six months ago vs 94.0 year ago) remain highly optimistic though fallen slightly from its period and year ago lofty heights. Outlook for the Stock Market (70.0 vs 53.9 period ago vs 50.1 year ago) however, has improved significantly surpassed by only five of the past nineteen index scores.
Sentiments on Employment (55.5 vs 78.9 six months ago vs 76.3 year ago) have however weakened significantly. This softening of Employment sentiments is also evident in all three urban centers surveyed but it is most obvious in Shanghai (37.5 vs 79.3 six months ago vs 67.5 year ago).
HONG KONG (88.5)
Hong Kong (88.5) consumers are very optimistic, being slightly more so than they were six months ago (85.8) and year ago (85.5). This is a record high for Hong Kong since the inception of the MasterIndex in October 1993 and dwarfs the market’s historical average MasterIndex of 52.0.
Sentiments on Employment (93.5), Economy (93.8), Regular Income (91.6) and Quality of Life (89.2) are highly optimistic and at 74.2, the current Stock Market Index score ranks eighth out of the twenty-seven scores collected over the history of the survey.
Indonesia’s consumer confidence (42.4) has improved slightly over period ago but it remains pessimistic and is well below its optimistic year ago level as well as its historical average.
Even though consumer sentiments on all five economic factors except the Stock Market have shown slight improvement over the previous period, they are well below year ago scores. With the exception of sentiments on Regular Income (79.0), Indonesian consumers are pessimistic towards Quality of Life (26.9) and Employment (30.2), the Stock Market (37.8) and the Economy (38.1).
Consumer confidence in Japan (68.9) continues to grow since having come out of pessimism for the first time in the 13 year history of the MasterIndex of Consumer Confidence six months ago. The current MasterIndex is a noticeable and significant improvement over six months ago (63.0), a year ago (45.4) and the market historical average of only 26.6.
Compared to a year ago, Japanese consumers are clearly and significantly more optimistic on all economic factors. The growth in consumer confidence over six months ago is attributed to a very significant growth in sentiments on Employment (80.3 vs 65.9 six months ago), the Economy (78.4 vs 66.6 six months ago) as well as on the Stock Market (71.4 vs 63.6 six months ago).
Korea (28.1) is one of the hardest hit markets in this MasterIndex. It is one of the two markets where consumer sentiments are pessimistic across the economic variables, with Taiwan being the other. Consumer confidence in this market has dropped sharply from both six months and a year ago, to about half its historical average (53.1).
This 2Q 2006 survey sees a sharp and significant decline in consumer confidence in Korea. Its current MasterIndex surpasses only that of the Asian Crisis of 2Q 1998 (14.1) and 4Q 1997 (19.8) and by 4Q 2000 (25.9). Consumers are very pessimistic over the next six months, especially towards Employment (17.7), the Economy (14.2), and to a lesser degree, outlook on Quality of Life (30.9) and the Stock Market (35.8).
Malaysia’s MasterIndex of 51.4 suggests that Malaysian consumers are mildly optimistic about the next six months. Consumer confidence has significantly declined from six months ago (68.7) and year ago (61.4). It is currently the lowest since 4Q 2001 and is well below the market historical average of 75.1.
Malaysian consumers are slightly optimistic about Employment (58.7), Regular Income (53.3) and Quality of Life (52.2), neutral on the Economy (49.1) and are slightly pessimistic about the Stock Market (43.7). The recent increase in petrol prices, the announcement of a price hike in electricity and the repercussion these have on cost of living may have caused a knee-jerk reaction on the usually positive Malaysian consumer outlook.
MasterIndex of 45.2 shows a slight improvement over six months ago (42.5) but the current MasterIndex remains significantly below its historical average of 59.4.
While outlook on Regular Income (85.8) continues to be optimistic, outlook on the Economy (25.2) as well as the Stock Market (28.7) are highly pessimistic and sentiments on Employment (42.7) and Quality of Life (43.5) are pessimistic.
Consumer confidence in this market (51.9) has improved immensely over six months ago and year ago (both with a MasterIndex of 28.9). This impressive improvement is clearly evident in all five economic factors.
The current marginally optimistic market sentiment comes from a very positive outlook on Regular Income (83.5) and to a much lesser degree, the Stock Market (55.3). Sentiments on Quality of Life 35.5; Employment 40.1 and Economy 45.3 are however still pessimistic. In short, while consumer confidence has improved greatly, there is still some way to go towards restoring confidence in the Quality of Life, Employment and the Economy.
Consumer sentiments in Singapore remain strong. Its MasterIndex at 73.9 while remaining relatively unchanged from period ago (74.8) is higher than year ago (69.7) and is the second highest in the last five and a half years. It is also much higher than the market’s historical average of 64.9.
Singapore’s MasterIndex is supported by an optimistic outlook on Economy (88.0), Employment (80.6), Quality of Life (74.9) and Regular Income (74.4), signifying an optimistic outlook for the next six months.
Despite the slight pick up in the current Taiwan MasterIndex (29.1) over period ago due primarily to improved Stock Market sentiments (43.8 vs 28.1 period ago), consumer sentiments in this market remain pessimistic. Its current MasterIndex is lower than year ago (38.6) and is the fifth lowest in the history of twenty-seven surveys. At 29.1, the current MasterIndex is very much below the market’s historical average of 49.2
Current sentiments on all five economic factors range from pessimistic to very pessimistic: Quality of Life (20.7), Employment (21.7), Economy (27.8), Regular Income (31.7) and Stock Market (43.8).
Consumer confidence in this market is at its lowest level since the Asian Crisis of 1997/98. Its MasterIndex of 28.6 is the fourth lowest in the history of twenty-two surveys. It has clearly taken a sharp fall from six months (47.9) and year ago (60.4), and is also below its historical average at 57.4.
Consumer sentiments in Employment (22.7), Economy (18.4), Stock Market (21.9) and Quality of Life (20.3) are at a low, with only sentiment on Regular Income (59.6) somewhat optimistic.
Vietnam (89.6) continues to feel very optimistic about the Economy, Employment, Regular Income and Quality of Life as it has been since the market was incorporated in the MasterIndex in 4Q 2003.
However, while consumer sentiments in Vietnam (89.6) continue to be very optimistic, it is slightly less so than six months ago (93.1), year ago (92.1) as well as the three foregoing periods. The historical average MasterIndex for this market is 91.7.