2010.09.1311:04:00UTC+00South African Consumer Confidence Stable In Q3

Confidence among South African households remained largely unchanged in the third quarter, sticking to the relatively high level reached shortly before the sharp decline in 2008, a survey by the Bureau for Economic Research and the First National Bank showed Monday.

The FNB/BER consumer confidence index recorded a modest increase to 15 from 14 in the second quarter. However, the reading was still below the 2006 and 2007 levels, the survey report said

The survey, conducted between August 6 and 18, revealed that consumers remained optimistic about the prospects for the economy in the next 12 months with the corresponding index registering a reading of 23. The gauge measuring consumers' expectations about their own finances posted a reading of 25, indicating that they were positive about the prospects of individual financial conditions.

However, households remained somewhat hesitant to commit themselves on a large scale to purchase big ticket items, with the relevant indicator posting a reading of minus 4. There was a notable improvement in high income earners' willingness to buy durable goods. The corresponding indicator increased to 2 from minus 9 in the second quarter.

"The decline in the nominal interest rate to its lowest level in three decades, talk of a possible further half a percentage point cut in September, attractive prices of durable goods thanks to the strength of the rand and the anticipated rise in new vehicle prices after the introduction of emission taxes possibly collectively persuaded high income earners that now is a good time to buy durable goods", said Cees Bruggemans, chief economist of FNB.

Last week, the South African Reserve Bank lowered its benchmark repurchase rate by 50 basis points to 6% with the rate cut designed to provide further stimulus to the domestic economic recovery. Economic growth slowed in the second quarter with the the seasonally adjusted gross domestic product rising at an annualized rate of 3.2% sequentially, compared to 4.6% growth in the first quarter.

Inflation has cooled during July. Annual consumer price inflation eased for the seventh consecutive month, slowing to 3.7% from 4.2% in June.

Copyright(c) 2010 News.com, Inc. All Rights Reserved