JOHANNESBURG - Consumer confidence plunged to record lows in 35 years during the second quarter of 2020 due to the halt in economic activity in the three months to June.
The FNB/BER Consumer Confidence Index (CCI) on Tuesday plummeted from an already depressed level of -9 in the first quarter of 2020 to a shocking -33 during the second quarter.
The latest CCI reading is now only 3 index points shy of the all-time lowest consumer confidence level of -36 recorded in 1985.
FNB said consumer confidence was severely affected by the outbreak of the coronavirus (Covid-19) pandemic and subsequent severe restrictions during the three months to June.
FNB chief economist Mamello Matikinca-Ngwenya said the fact that consumer confidence dropped to a 35-year low during the second quarter underpinned the profoundly negative impact of Covid-19 and the related economic restrictions on South African consumers.
“The sharp deterioration in the financial prospects index of the CCI and the complete collapse in the time-to-buy durable goods index suggest that the Covid-19 pandemic and ensuing economic restrictions had a materially negative impact on both consumers' ability and willingness to spend,” she said.
“Millions of workers were placed on unpaid leave or reduced pay, or even retrenched, as businesses scrambled to survive the lockdown - this severely constrained household income, and therefore consumers' ability to spend.”
FNB said the dramatic decline in the CCI during the second quarter can be ascribed to a further deterioration in the economic outlook index, and major drops in the household finances and time-to-buy durable goods indices.
Low-income consumers earning less than R2 500 per month posted the largest decline in confidence during the second quarter, slumping by a historic 37 index points from +2 to -35 during the second quarter.
Sentiment among middle-income households earning between R2 500 and R20 000 per month fell by 26 index points to -30.
The confidence levels of high-income consumers earning more than R20 000 per month deteriorated by 16 index points to -33.
Matikinca-Ngwenya said the highly uncertain outlook for the South African economy and intense pressure on household budgets no doubt convinced consumers to postpone their spending on big-ticket items such as passenger cars, household furniture and jewellery.