Global consumer confidence held steady at 94 for three consecutive quarters with Asia Pacific being the only region that shows confidence gain from the previous quarter, according to consumer confidence findings from Nielsen.
At the end 2013, the Asia-Pacific confidence index rose one point from the previous quarter to 105 and four points from the fourth quarter of 2012. Compared to the third quarter of 2013, consumer confidence declined three index points in North America (95), two points in Middle East/Africa (90) and one point in Europe (73); confidence remained flat in Latin America with an index of 94.
All confidence indicators posted marginal gains in Asia-Pacific in the fourth quarter, with a 2-percentage point increase for job prospects (62 per cent), a 1-percentage point increase for personal finances (62 per cent) and a 3-percentage point rise for spending perceptions over the next 12 months (43 per cent). Consumer confidence increased in six of 14 countries, with a quarterly increase of 6 percentage points in Japan, which posted its highest index since 2005 of 80. China increased one index point in the fourth quarter for a score of 111.
“In Japan, the boost in optimism follows positive developments during 2013, which include a weaker yen that contributed to the recovery of exports and a rise in the Nikkei stock average,” said Toshihiro Fukutoku, managing director, Nielsen Japan. “In anticipation of the April 2014 sales tax hike, Japanese consumers have been spending more, but caution prevails for the second half of the year.”
India also reversed its downward confidence trend of the last three quarters. The percentage of Indians who said they were in a recession declined 14 percentage points to 62 per cent from 76 per cent in the third quarter of 2013.
“Throughout 2013, consumers around the world remained in a virtual holding pattern as global unemployment showed few signs of progress during the year,” said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen. “Recovery continues to move very slowly and is hampered by cash-strapped consumers who grapple with having little discretionary income after paying essential expenses. As 2014 progresses, a brighter outlook is expected, but sluggishness will continue until there is a marked improvement in the jobless rate and wages go up commensurate with rising costs.”
The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns, and spending intentions among more than 30,000 respondents with Internet access in 60 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. In the latest round of the survey, conducted November 11–29, 2013, consumer confidence increased in 43 per cent of markets measured by Nielsen, compared to 57 per cent in the third quarter of 2013.
Indonesia reported the highest consumer confidence index (124) for the fourth consecutive quarter, increasing four index points compared to the third quarter. Portugal, Italy, Croatia and Slovenia each reported the lowest consumer confidence index of 44. Colombia reported the biggest quarter-on-quarter index increase of nine points for a score of 93; Portugal saw the biggest decline, decreasing 11 index points.
Nielsen information shows that around the world, discretionary spending intentions declined across all categories measured in the four quarter of 2013 and largely returned to the levels seen in the same period a year earlier. Spending on out-of-home entertainment (28 per cent) decreased 7 percentage points from the third quarter. Intentions to spend on new clothes (31 per cent), spend on holidays/vacations (32 per cent), and invest in stocks and mutual funds (19 per cent) each decreased 6 percentage points from the previous quarter, while saving intentions (47 per cent), spending on new technology (24 per cent) and spending on home improvement projects (20 per cent) declined 5 percentage points each – within range of the same results from one year ago. Globally, 15 percent of online respondents said they had no spare cash, an increase from 13 percent reported in the previous quarter and on par with Q4 2012 findings.
“Growth in developing markets is slowing, and with weaker prospects than before, they are competing for investment and financial resources as advanced economies recover,” said Dr. Bala. “Recession-minded consumers who are already challenged by rising living expenses showed a reluctance to spend leading up to the holiday season and kept their money in their wallets.”
According to Nielsen’s survey, more than half (57 per cent) of global respondents believed their country was in an economic recession in the fourth quarter of 2013, a one-point decrease from the previous quarter and a two-point decrease from the same period last year.
Meanwhile, recessionary sentiment has gradually declined among the world’s largest economies, including the US, which has reported a decrease in recessionary sentiment of 14 percentage points since the first quarter of 2008. Germany has seen a decline of 9 percentage points over the same period, and Japan’s recessionary outlook is down 3 percentage points.
“While the recovery has been painfully slow, it is important to point out that recovery in many key economies is on the right track,” said Dr. Bala. “The US, Germany, Japan and 33 other countries, which includes China, the United Kingdom and France, each ended 2013 with higher consumer confidence scores than at the start the year.”
In Europe, consumer confidence fell in 18 of 32 markets in the fourth quarter of 2013, with the biggest index declines coming from the previous quarter’s biggest gainers. Confidence declined 11 index points in Portugal, 10 points in France and six points in Belgium, compared to the third quarter. However, the region’s largest economy, Germany, posted a confidence score of 95, three points higher than Q3 and eight points ahead of the same time period the previous year (Q4 2012).
“Europe has stabilised, but faces a long and gradual road to economic recovery,” said Dr. Bala. “While progress has been painfully slow, the relative levels of pessimism in the region are better than a year ago when many of Europe’s key economies hit all-time lows.”