8 September 2020 – The Bureau for Economic Research (BER) reported on September 7 that its Consumer Confidence Index (CCI) was less pessimistic during the third quarter. After the index crashed from -9 index points in the first quarter of 2020 to a 35-year low of -33 in the second quarter, the CCI edged up to -23 for the July-September period. While the latest CCI reading is an improvement on the 2020Q2 outcome, it is still weaker than, for example, what Trading Economics expected with a forecast of -12.
The survey period (August 11-21) for the latest CCI straddled a key speech by President Cyril Ramaphosa on August 15 where he announced the country would move to level 2 lockdown, that provincial borders would be re-opened for leisure travel, and that banning the sale of alcohol and tobacco products would be significantly reduced. This improved survey respondents’ outlook on household finances and the present time being appropriate for purchasing durable goods (e.g. furniture, appliances, sports equipment and toys).
Nonetheless, consumer sentiment remains – understandably – net negative. The Unemployment Insurance Fund (UIF) received more than 10 million applications for the Temporary Employer/Employee Relief Scheme (TERS) – highlighting the depth of income loss across the country since the lockdown started late in March. Data from internet giant Google shows that, by the start of September, workplace activity in South Africa was still 28% below levels seen at the start of the year.
On a positive note, the outlook for household finances improved to a near-neutral -2 reading in the third quarter after falling into negative territory during the preceding three-month period. The disbursement of TERS payments and (temporarily) increased social grants certainly improved perceptions of household finances. Furthermore, with many low-income workers unable to do their jobs during the second quarter due to the lockdown, a much broader relaxing of restrictions in the third quarter allowed many more to return to work.
As a result, South Africans are returning to shopping malls. Google measured retail and recreation activity (e.g. at restaurants, cafés, shopping centres, theme parks, museums, libraries and cinemas) at only 12% lower in early September compared to a benchmark period of January 3 to February 6. South African shoppers are also benefitting from very low inflation and a three percentage points cut in interest rates since the start of the year. Source (MoneyMarketing)