Global consumer confidence increased one index point to 97
Consumer confidence increased slightly or remained stable in every region except Latin America
New York, NY – May 19, 2015 – Global consumer confidence started 2015 with an index score of 97—an increase of one point from fourth-quarter 2014 and from a year-ago, according to the Nielsen Global Survey of Consumer Confidence and Spending Intentions. The Nielsen Consumer Confidence Index measures perceptions of local job prospects, personal finances and immediate spending intentions among more than 30,000 respondents with Internet access in 60 countries.
“While confidence across global regions remained relatively stable in the first quarter, there is considerable variation across different markets,” said Louise Keely, senior vice president, Nielsen, and president, The Demand Institute. “In the first quarter of this year, the key emerging markets of Brazil and Russia saw large declines in confidence for the second consecutive quarter, with the drop in oil prices and the political instability in Brazil. China dropped another index point at the start of this year, which comes after a four-point decline in the previous quarter, reflecting the recent slowdown in GDP there.”
“In Europe, there are signs of improved consumer confidence in many countries, which reflects signs of growth in these markets,” continued Keely. “Lower oil prices have helped European consumers who are not in oil-producing countries, and labor markets are improving. On the other hand, the falling Euro against the dollar is good for export industries but not for consumers, who will pay more for imports.”
GOOD NEWS AND BAD NEWS
The good news is that, compared to the end of last year when all regional confidence scores declined, it was a more upbeat start to the year, as confidence increased slightly or remained stable in every region except Latin America. Consumer confidence remained steady in North America (106) and increased one point in Asia-Pacific, posting the highest quarterly regional index score of 107. Confidence in the Middle East/Africa (96) and Europe (77) edged up one point in the first quarter but decreased two points in Latin America (86)—the region’s lowest score since 2011.
Among the world’s largest economies, consumer confidence increased most in Japan, rising nine points to 82 in the first quarter, which was the country’s highest score since 2005—the start of Nielsen’s Consumer Confidence Index measurement. Germany also reached a milestone: Sentiment increased two points to reach the baseline score of 100. Confidence also increased one point in the U.S. (107), three points in the U.K. (97) and three points in France (60). Conversely, confidence in China decreased one point to 106 from fourth-quarter 2014.
SPENDING LESS, SAVING MORE IN Q1 2015
Global discretionary spending intentions declined or remained steady in the first quarter across all lifestyle categories measured. About three-in-10 global respondents (32%) planned to spend on holidays/vacations, new clothes (31%) and out-of-home entertainment (28%), quarterly declines of two, three and two percentage points, respectively. Spending intentions for paying credit cards and debts (25%) and new technology products (24%) held steady from the previous quarter. Millennial respondents—especially those in the 25-29 age range—exceeded the global averages by as much 10 percentage points for these discretionary spending activities. These consumers who are just starting their careers often do not yet have families to support and have more freedom to spend.
Global saving intentions, on the other hand, showed a slight increase of two percentage points for investing in stocks and mutual funds (22%) and one percentage point for retirement savings (11%) from fourth-quarter 2014. About half of global respondents planned to bank their spare cash (48%), no change from the previous quarter, while 14% said they had no spare cash, up from 13% the previous quarter. More than one-quarter of those aged 55+ said they had no spare cash (22%)—the highest percentage of any age group. A promising sign for the future, however, is that more than half of respondents in the 21-34 age range (53%) said they were saving their money.
NORTH AMERICA: U.S. CONFIDENCE IMPROVES AS CANADIAN CONFIDENCE TAKES DOWNTURN
U.S. consumer confidence increased one index point in the first quarter to a score of 107, maintaining an above-the-baseline optimism level for a year now. Conversely, confidence declined in Canada six points to 96, which is the country’s lowest score since 2012.
In the U.S., the only confidence indicator that increased in the first quarter was job prospects, rising five percentage points to 55%, while personal finance sentiment and immediate spending intentions declined two percentage points each to 62% and 50%, respectively, from fourth-quarter 2014. Recessionary sentiment reached a new low of 50%, down from 53% the previous quarter and 63% six months ago.
“In the U.S., optimism continued to move forward in the first quarter, likely influenced by the addition of nearly 600,000 new jobs and low gasoline prices, which put more money in consumers’ wallets,” said James Russo, senior vice president, Nielsen Global Consumer Insights. “Consumer spending picked up in the first quarter, with fast-moving consumer goods sales rising 2.5%, compared to an annual increase of only 1.4% during 2014. While 2015 is off to a good start, half of Americans are still in a recessionary mindset, and nearly 35% say they live paycheck to paycheck. As this undercurrent of uncertainty still permeates, consumers continue to think carefully about how and where they spend their money.”
SOME SIGNS OF HOPE IN EUROPE
Europe remained the least optimistic region globally with an overall index of 77, but there were several signs that green shoots were sprouting in the recession-mired mindsets in the region. Job confidence rose in 15 of 32 markets, while respondent’s personal financial outlook increased in 18 from fourth-quarter 2014. Confidence for immediate spending intentions, while still comparatively low, increased in 19 markets.
Italy and Greece, two of the region’s debt-ridden and recession-battered countries, both showed confidence increases of 12-points in the first quarter. Italy’s score of 57 was the highest for the country since 2011, and Greece posted a confidence reading of 65—its highest level since 2009.
“In Greece, a new government was elected in the general elections that took place in January, and as such, this kind of change usually boosts optimism and brings new hope for the future,” said Vicky Grigoriadou, market leader, Nielsen Greece. “The rise in optimism in the first quarter is higher than in past quarters, likely due to an expectation that the new government will successfully negotiate with EU and IMF authorities on the Greek debt issue and other economic prospects. Retail purchasing patterns remained restrained, however, as a more stable environment is necessary in order to increase household spending activities.”
In the region, only Germany (100) and Denmark (106) reached the optimism baseline level. They were also the only two countries in the region where half (50%) of respondents were confident about immediate spending intentions.
“In Germany, a stable economic situation and a strong labor market had a positive impact on consumer confidence in the past 12 months,” said Ingo Schier, managing director, Nielsen Germany. “Compared to last year, more Germans were willing to spend money. Grocery and drug-store spending this year has been at a continuously higher level than the previous year, with sales up 1.6% and 4.6%, respectively. Rising incomes and persistently low interest rates suggest that the consumer climate will stay positive in Germany for the long-term, but terrorism concerns and armed conflicts threaten to dampen these effects.”
Several other countries posted their highest confidence scores in several years: The U.K.’s score of 97 reached the highest level since 2006, Ireland (92) reached its highest since 2008, Spain (67) reached its highest since 2010, and Portugal (59) reached its highest since 2006. Conversely, ongoing geopolitical tensions between Russia and the Ukraine likely contributed to new confidence lows reported in these countries. Russia’s index fell for the second consecutive quarter to 72, a level lower than its confidence reading at the height of the Great Recession, and the Ukraine’s score dropped 11 points to 41 in the first quarter.
“The normally resilient Russian consumer is under severe strain right now,” said Kyriakos Kyriakou, regional director, Nielsen Eastern Europe. “The massive currency devaluation at the end of 2014 led to a flourish of consumer spending in an attempt to get ahead of inflation. Now, spiking inflation and negative wage growth are taking their toll. In the new market conditions, manufacturers and retailers will fight for a smaller share of shopper wallets as the majority of Russians have either switched into savings mode or have no spare cash to spend. Today, it’s more critical than ever to get the “price vs. volume” equation right in order to maintain market share. Cheaper products are likely to generate more sales volumes than ever—as long as quality is not compromised.”
CONFIDENCE IN ASIA-PACIFIC REMAINS HIGH
Consumer confidence in Asia-Pacific increased in nine of 14 markets in the first quarter, compared to only three that rose in the fourth-quarter 2014. Nine markets also remained at or above the 100-baseline level of optimism. India had the highest index score in the region of 130, a one-point increase from the previous quarter and a level that has not been reached since 2011. Confidence in India has been on the rise for six consecutive quarters.
“The urban Indian consumer started the year with positive sentiment in anticipation of improvement through reforms and stimulus announced by the new government,” said Piyush Mathur, president, Nielsen India Region. “These initial signs of optimism reflect anticipation of economic recovery that are yet to manifest when you look at fast-moving consumer goods and auto sectors in particular over the last few quarters. Moreover, infrastructure, engineering and other industrial sectors are yet to gather pace. The fall in inflation is expected to have an impact on disposable income over time, but it will take time for the sectors to be restored to perceptible and sustainable growth.”
Big index increases were reported in Taiwan, where confidence rose 11 points to 88—the highest score since 2011—and in Japan, which rose nine points to 88—the highest score for the country recorded by Nielsen since 2005.
“Taiwan showed a strong rebound at the start of this year after a decline in fourth-quarter 2014,” said Andy Huang, managing director, Nielsen Taiwan. “The rise in confidence sentiment was driven by a strong improvement in the outlook for jobs, which increased 16 percentage points from fourth-quarter 2014. Perceptions about personal finances and a willingness to spend also improved nine and 10 percentage points, respectively. Preliminary GDP forecasts, a falling unemployment rate and a stabilizing consumer price index were other positive indicators at the start of 2015, which likely contributed to increased optimism among Taiwanese consumers.”
Vietnam and Malaysia also reported strong confidence boosts of six and five points, respectively, in the first quarter. Vietnam’s rise to a score of 112 is the third consecutive increase and the country’s highest score since 2010. Conversely, China’s index fell one point to 106 in the first quarter, which comes after a four-point decline in fourth-quarter 2014.
LATIN AMERICAN CONFIDENCE UNEVEN
Of seven Latin American markets, Chile (87) and Argentina (75) showed consumer confidence gains of six and eight points, respectively, while the region’s economic engine, Brazil (88), continued to fall for the second consecutive quarter, as confidence declined seven points to the lowest level since 2009. Confidence in Venezuela (65) also fell five points, while Peru’s score (99), the highest in the region, dropped two points in the first quarter. Confidence in Colombia held steady at 94 from fourth-quarter 2014.
In Brazil, sentiment about future job prospects declined 10 percentage points to 27%—a new low for the country, while personal finances sentiment decreased six percentage points to 60%, the second lowest level in 10 years. The number of Brazilians who believed they were in recession increased to 85% from 73% the previous quarter and from 55% from a year ago.
“In Brazil, the results reflect the uncertainty over the country’s ability to increase growth rates in the short-term, return to more moderate inflation levels and avoid further unemployment increases,” said Luis Arjona, country manager, Nielsen Brazil. “Concerned with the overall economic environment, Brazilian consumers have become more conservative with their disposable income, reducing out-of-home spending, while buying more on planned trips at grocery stores. They are also increasing the share of grocery spend at discount stores and reducing spend on impulse categories.”
THE MIDDLE EAST/AFRICA REGION SHOWS STEADY PROGRESS
Consumer confidence increased in three of five countries measured in the Middle East/Africa region in the first quarter. At 115, the United Arab Emirates had the highest index in the region, an increase of one point from fourth-quarter 2014. Confidence also increased five points in Saudi Arabia to 107 and one point in Pakistan to 102. Conversely, confidence decreased one point in South Africa to 87 and remained steady in Egypt at 90.
In the region, sentiment about job prospects edged up one percentage point to 44%, while personal finances sentiment and immediate spending intentions remained flat at 60% and 39%, respectively, from fourth-quarter 2014. Job confidence improved most in Egypt, rising three percentage points to 43%, while the personal financial outlook and immediate spending intentions rose four and five percentage points, respectively, in Pakistan from fourth-quarter 2014.
Recessionary sentiment declined in three out of five Middle East/Africa markets: Egypt and South Africa each declined two percentage points to 79% and 70%, respectively, and Saudi Arabia declined one percentage point to 43%.
Regionally, quarter-on-quarter discretionary spending and saving intentions decreased or held steady for most lifestyle categories. Spending intentions for home entertainment expenses, buying new clothes and taking holidays/vacations declined, while intentions for putting money into savings accounts increased and the percentages for investing and saving for retirement were flat from the previous quarter.
CONFIDENCE UP IN NIGERIA, DOWN IN KENYA AND GHANA
Consumer confidence increased two index points in Nigeria in the first quarter to a score of 129—the highest score of the three countries measured in Nielsen’s mobile survey for sub-Saharan Africa. Conversely, confidence decreased nine points in Kenya (104) and three points in Ghana (99) from fourth-quarter 2014.
The majority of respondents in the three countries (69% in Kenya, 67% in Ghana and 62% in Nigeria) said they did not have spare cash, a level that increased 10 percentage points in Kenya and one percentage point in Nigeria from fourth-quarter 2014. Among those who did claim discretionary funds, while saving continued to be a priority for the majority, intentions to put money into savings accounts declined 10 percentage points in Nigeria (76%), seven percentage points in Ghana (78%) and six percentage points in Kenya (83%) in the first quarter. Discretionary spending intentions for home improvement projects were the second-biggest priority among respondents in all three countries.
ABOUT THE GLOBAL SURVEY OF CONSUMER CONFIDENCE AND SPENDING INTENTIONS
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Feb. 23 – March 13, 2015 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 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.