July 28, 2011
Johannesburg, 28th July 2011 – South African consumer confidence has rebounded from historic lows to its highest level since 2009 according to the latest MasterCard Worldwide Index of Consumer Confidence, released today.
The survey recorded an overall increase of 10.8 points in South African consumer confidence from a low of 54.7 only six months ago to a current optimistic score of 65.5.
Now in its seventh year in South Africa, the MasterCard Worldwide Index of Consumer Confidence is the Asia/Pacific, Middle East and Africa (APMEA) region’s most comprehensive consumer confidence survey. Released twice a year, the Index is based on a survey which measures consumer confidence on prevailing expectations in the market for the next six months based on five economic indicators: Economy, Employment, Stock market, Regular income and Quality of life. The Index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
The latest survey was conducted from the 15th March to 27th April 2011 and involved 17,620 consumers from 24 markets  across the APMEA region. Data collection was via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary. The Index and its accompanying reports do not represent MasterCard financial performance.
“South Africa’s optimistic score of 65.5 is a jump of nearly 20% compared to the 54.7 that the market scored in the previous six months, with all five of the key indicators that make up the overall consumer confidence score seeing increases. This indicates that South Africans are feeling strongly positive about the next six months,” says Anna Jones, Area Head for MasterCard Worldwide: Southern Africa.
“The increase in the overall MasterCard Confidence Index score to its highest level since 2009 is not surprising when viewed against the fact that South Africa emerged from the global recession as early as the third quarter of 2009. During the first quarter of 2011, South Africa recorded its seventh successive quarter of positive real GDP growth, rising to an impressive 4.8%. Furthermore, real disposable income levels of households have increased to an all-time high during early 2011 - close to R33,000 in annual per capita terms” says independent economic advisor, Dr. Roelof Botha.
The most significant increase in optimism compared to the previous Index came from the Employment indicator which saw a jump of 15.2 points from a score of 48.6 six months ago to a current score of 63.8.
“The accuracy of the survey results for Employment is supported by data from Statistics South Africa that confirms a return to formal sector employment creation since the fourth quarter of 2010,” he added.
Other indicators that saw noteworthy increases were the Economy, Quality of Life and Stock Market with increases of 11.4, 11.2 and 10.2 points respectively.
Although it had the smallest increase of the five indicators in comparison to the previous Index, Regular Income still saw a notable increase from an already moderately optimistic score of 69.2 six months ago to a current score of 75.3. Regular income was the most optimistic of the five indicators for South Africans, 9.4 points higher than the next most optimistic indicator - Quality of Life - that had a score of 65.9.
When asked whether they are expecting their regular income to either increase, remain the same or decrease over the next six months, nearly 45% of South African respondents said that they were expecting it to increase, 40% said they were expecting it to remain the same and only 15% said that they expected it to decrease.
“The rise of over six points in consumers’ already-high confidence in Regular Income is correlated to consistent increases in average remuneration levels since the end of the recession. According to Statistics South Africa, the average nominal salary in the formal sectors of the economy was more than 27% higher in the first quarter of 2011 than two years earlier. Salary increases have also outstripped inflation by a margin of close to 9% over the past two years. ” says Botha.
Although in a very optimistic space, the South African consumer confidence level is still off its historical peak of 91.1 points from the second half of 2006, and is below South Africa’s historical average of 73.2 since the survey was first conducted in the first half of 2004.
In summary, the strong improvement in the overall MasterCard Index of Consumer Confidence in South Africa can be viewed against the backdrop of sound increases in the levels of household consumption expenditure as well as increases in disposable incomes.
“During the first quarter of this year, household consumption expenditure on durable goods was more than 22% higher than a year earlier, signalling a renewed appetite amongst consumers for credit-related spending. Fortunately, the purchasing power of South African households reached a new record high this year and it is clear from the MasterCard Survey that consumer sentiment is following suit,” Botha concludes.
“It is encouraging to see that not only has consumer confidence rebounded to its highest level since 2009, but that increases were recorded across all five indicators. This has resulted in South African consumer confidence outperforming all of the non-oil producing markets in the APMEA region,” concludes Jones.
 Africa: Kenya, Morocco, Nigeria, South Africa. Middle East: Egypt, Kuwait, Lebanon, Qatar, Saudi Arabia, United Arab Emirates. Asia/Pacific: Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, and Vietnam.
The MasterCard Worldwide Index™ of Consumer Confidence survey has a 19-year track record of consumer confidence indices collected from over 200,000 interviews, unequalled both in scope and history across Asia/Pacific.
The MasterCard Worldwide Index of Consumer Confidence is the most comprehensive and longest running survey of its kind in the region. In June 1997, the Index revealed a decline in consumer confidence – one month prior to the devaluation of the Thai baht that triggered the regional economic crisis. In June 2003, the Index score for Employment in Hong Kong dropped to a low of 20.0. This was subsequently reflected in Hong Kong’s unemployment rate, which peaked just before September 2003 at eight percent.
The survey comprising the Asia/Pacific markets began in the first half of 1993 and has been conducted twice yearly since. Markets from the Middle East and Africa were included in the Index from 2004. Twenty-four markets now participate in the survey: Australia, China, Egypt, Hong Kong, India, Indonesia, Japan, Kenya, Kuwait, Lebanon, Malaysia, Morocco, New Zealand, Nigeria, Philippines, Qatar, Saudi Arabia, South Korea, South Africa, Singapore, Taiwan, Thailand, United Arab Emirates and Vietnam. The last MasterCard Worldwide Index of Consumer Confidence survey was conducted from 13 September to 11 November 2010. A total of 10,502 qualified respondents were surveyed in the 24 markets with the sample being representative of the middle and upper income groups in each market. In each market except China and India, 400 or more people were surveyed. A minimum sample size of 800 was collected from China and India.
The Index is calculated based with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life. The responses are consumers' thoughts on the six months ahead. Data collection was via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four percentage points at the 90 percent confidence level, except China and India where because of the larger sample, the margin of sampling error is plus or minus three percentage points.
The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the MasterCard Worldwide Index of Women’s Advancement, Online Shopping, Index of Financial Literacy, and the Index of Global Destination Cities. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining & Entertainment, Education, Money Management, Luxury and General Shopping).
MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.
MasterCard has also released a series of four books on Asian consumer insights, authored by Dr. Yuwa Hedrick-Wong, Global Economic Advisor for MasterCard Worldwide and published by John Wiley & Sons.
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.