According to Nielsen’s latest consumer confidence survey results, the rising cost of utility bills is the biggest concern for Australians over the next six months – higher than any other nation in the world.
The survey results for the second quarter of 2014 revealed more than a third (34%) of Australians confirmed rising cost of utility bills as their biggest or second biggest concern for the next six months – up from 29 percent in quarter two 2013, followed by the economy (28%) and job security (26%).
Consumer confidence in Australia has declined four points from quarter one’s record low (89 points) to 85 points. It’s the fourth straight quarterly decrease and the country’s lowest score since Nielsen began measuring consumer confidence in 2005.
Just one-third of Australian respondents were optimistic about job prospects—the lowest level since 2009. Scores for personal finances (48%) and intentions to buy (37%) in the next 12 months also declined two and four percentage points, respectively. Close to half (48%) of Australian respondents regarded the state of their personal finances to be ominous, up nine percentage points compared to the same quarter last year.
This marked deterioration in overall sentiment, however, is not being reflected in underlying consumption activity.
Sentiment readings tend to reflect what people are feeling about the future rather than what they are doing right now. Over the past twelve months, consumption expenditure has increased at an average of 5.1 percent and retail sales growth, a subset of final consumption expenditure, has also accelerated.
So what do the latest consumer confidence results tell us about future consumption expectations?
As a generalisation, an increasing consumer confidence index indicates a gain in expectations, an optimistic outlook or perhaps hopes for the future. In macro terms, it is a reading of expectations regarding future economic growth. We know from our Consumer and Media View Panel that Australians are familiar with economic growth measures and rate it the number one social issue confronting Australians.
When we see a declining consumer confidence index, it indicates consumers are losing confidence in a much expected pick-up in economic activity. When accompanied by declining rates of growth in disposable income, rising interest rates and unemployment (the big three drivers of consumption), a fall in the consumer confidence index is a leading indicator of future consumption. Over the last few quarters disposable income growth has slowed, unemployment has increased modestly but interest rates (on household debt) are stable.
On these measures we would view the current confidence index movement s as a measure of underlying uncertainty amongst consumers which is causing them to be sensitive to changes in cost of living e.g. utility costs.
Australian Consumer Confidence vs Income and Expenditure Growth
Globally, consumer confidence increased one index point to 97 in the second quarter of 2014, the highest score since Q1 2007. This follows a two-point increase at the start of the year that marked the global index’s first return to pre-recession levels. Additionally, half of global respondents believed the job market would be good or excellent in the upcoming year, a 1-percentage-point increase from the first quarter and a level not reached since 2007.
NEW INTERACTIVE DATA VISUALISATION TOOL
In conjunction with the second-quarter index release, Nielsen is unveiling a new interactive data visualisation tool based on nine years of historical global consumer confidence data, which spans 60 countries and represents a global online population of some 2 billion consumers. The Nielsen Global Consumer Confidence Trend Tracker allows users to select a variety of different data points related to consumer economic sentiment to create dynamic visualisations by region, country, issue, and time period.
ABOUT THE NIELSEN GLOBAL SURVEY
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted May 12-30, 2014, and polled more than 30,000 online consumers in 60 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users, is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60-percent Internet penetration or 10M online population for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.