Malaysia’s consumer confidence index remained pessimistic but steady in Q3 2016 with an increase of only two index points to 89 percentage points (pp) compared to previous quarter, according to the latest Nielsen Global Survey of Consumer Confidence and Spending.
Consumer confidence levels are positive in four out of six Southeast Asian countries and remains firm with scores above the 100 pp mark. The Philippines (132 pp, unchanged from last quarter) and Indonesia (122 pp, +3 pp versus past quarter) are the world’s second and third most confident country, respectively. Thailand registered the largest increase in the region with a score of 108 pp (+7 points from previous quarter) followed by Singapore at 94 pp (+6 pp compared to last quarter). Vietnam’s consumer confidence level remains unchanged at 107 pp.
“With little change in the nation’s economic outlook, the low exchange rate coupled with unstable oil prices, there was little for consumers to shift their mind set on the country’s future outlook. Hence, it was no real surprise to see the Q3 Consumer Confidence Index for Malaysia to be fairly stable but still on the pessimistic side.” said Richard Hall, Country Manager for Nielsen Malaysia
MALAYSIANS STAY HOPEFUL DESPITE BEING WORRIED ABOUT THE COUNTRY’S FISCAL HEALTH
The economy (46%), job security (24%) and increasing food prices (18%) lead Malaysian consumers’ list of top key concerns in Q3 2016. Whilst 77% of the respondents believe that the nation is in a recessionary state (declined 3% from last quarter), at least one in two Malaysians perceive their state of personal finances to be either good or excellent in the next 12 months (49%, up 1% from previous quarter) and over a third of Malaysian consumers are also feeling hopeful about the local job prospects (38% versus 36% last quarter).
The survey also revealed other areas of concern that registered a small rise compared to previous quarter which include terrorism (11%, up 7%), health (11%, up 1%) and crime (8%, up 1%).
“This Q3 2016 survey was conducted prior to the Government tabling the National Budget 2017. So, it is understandable that there was no key trigger which could have resulted in a significant change to the nation’s state of confidence,” notes Hall.
SAVING CONTINUES TO BE AN INTEGRAL PART OF SOUTHEAST ASIAN CONSUMERS’ LIFESTYLE
Plans to save for the future remain to be a core priority in Southeast Asia. Consumers in the region continue to be listed as the world’s top 10 most active savers with Vietnamese being first (78%) followed by Indonesians in second (77%). Malaysians and Singaporeans are ranked sixth, respectively (65%) while Thais sits in eighth place (62%) and the Filipinos takes the ninth spot (60%). The global average of consumers putting spare cash into savings is 52%.
As for finances and having set targets for savings and investments, two in five Malaysians are channeling any spare cash after covering essential living expenses to pay off debts, credit cards or loans (40%) while one third are investing in shares or stocks or mutual funds (34%). At least one quarter of Malaysians are also planning for their golden years by depositing their extra monies in the form of retirement fund (26%).
Although about two thirds of respondents feel that it is either a bad or not such a good time to purchase things that they want or need over the next 12 months (68%), findings from the survey showed an overall increase in willingness amongst Malaysian consumers to increase spend on items such as holiday packages (45%), new clothes (29%), new technology products (20%) and home improvements or decorating (18%).
“The increase in consumer’s intentions on spending albeit coupled with the need to save may signal the start of a turnaround in consumer mind set. Whilst many Malaysians want to save for a rainy day, they are generally doing so at the expense of an interest rate which is lower than inflation. Consumers could start spending again but if they do so without first paying off debts, then they are simply repeating the cycle of spending and increased debt.” explains Hall.
86% of respondents have also said that they have changed their spending habits in a bid to save on household expenses in the past 12 months (down 1% from last quarter). About three in five Malaysians are spending less on new clothes (60%) and on out-of-home entertainment (57%). At least one in two survey respondents have also switched to cheaper grocery brands (54%) in the past year to save on household expenses. Other areas where Malaysians have continued to be prudent include trying to save on gas and electricity (45%), cut down on take-away meals (35%) and delay the replacement of major household items (29%).
However, should economic conditions improve, at least one third of Malaysian consumers say they will continue to switch to cheaper grocery brands (32%), spend less on new clothes (30%) and minimise out-of-home entertainment (30%).
THE FMCG SECTOR SHOWS RELUCTANT GROWTH IN Q3 2016
In spite of sluggish economic conditions coupled with the weakened local currency, the Malaysian consumer purchasing power continues a stable climb with a total growth of 2.1% compared to the same quarter in the past year. Among all the FMCG super categories, Health & Wellness (8.3%), Personal Care (8.1%), Snack & Confectionary (5.0%), Household (4.1%) and Grocery (1.3%) all registered a positive increase while Beverage is the only super category that saw a dip in growth (-3.2%).
“For the first time over the last few years, we are seeing some progress in the FMCG sector with small levels of growth coming through, but growth nonetheless. Whilst most retailers are seeing some organic development with store openings at a minimal level, we also saw lower than expected sales levels in some key categories, in particular during the recent Hari Raya period. The overall FMCG sector remains highly competitive for both retailers and manufacturers and any growth is still hard earned.” observes Hall.
For more detail and insight, download Nielsen’s Q3 2016 Global Consumer Confidence Report. For a historical look at global consumer confidence by region, country and time period, explore the Nielsen Global Consumer Confidence Trend Tracker. If you would like more detailed country-level data from this survey, it is available for sale in the Nielsen Store.
ABOUT THE NIELSEN GLOBAL SURVEY
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted 10 August – 2 September 2016 and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. In Malaysia, the sample size is 511. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1,600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.