FNB/BER’s consumer confidence index (CCI) surged 34 points from -8 in Q4.17 to 26 in Q1.18, its highest level since the inception of the index. “The latest reading surpassed the previous record high of +23 index points reached in the first quarter of 2007 when the South African economy pumped out real economic growth of nearly 6%”, the BER emphasized. This was well above our expectations.

After 12 consecutive quarters of negative readings, the lift to 26 index points signifies that the majority of consumers are “(o) ptimistic about the outlook for the South African economy and their household finances,” the BER stated.

The waning of policy and political uncertainty following Cyril Ramaphosa’s election as president of the ANC and subsequently the republic, together with the avoidance of a sovereign rating downgrade by Moody’s rating agency and a budget more orientated towards fiscal consolidation, boosted the outcome.

All three sub-indices of the consumer confidence gauge improved substantially. The index which measures peoples’ perception of the outlook for the SA economy over the next 12 months jumped 36 points from -2 to 34 points, while consumers’ assessment of their own financial position soared to 31 points from 2 previously. Finally the number of individuals deeming it appropriate to purchase durable goods presently improved notably.

Confidence strengthened across all household income groups during Q1.18, while the CCI for high and middle income earners attained record highs.

According to the BER however, “(a)lthough we have already witnessed a number of positive ripple effects, it will take some time to implement investor-friendly reforms to boost economic growth and household income levels on a more enduring basis”. Therefore it stressed that there is a potential risk “(t) hat the CCI overshot during the first quarter on the back of the positive sentiment, implying that there could be a negative correction during the second quarter”.