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Consumer Confidence Index at all-time low on job loss fears

Consumer Confidence Index at all-time low on job loss fears
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First Published: Thu, Aug 27 2009. 09 50 PM IST
Updated: Thu, Aug 27 2009. 09 50 PM IST
Consumer confidence fell in August as increasing evidence of a drought forced individuals to save more and hoard necessities rather than spend on discretionary items.
The CNBC TV18 Boston Analytics Consumer Confidence Index fell 3.2% from July.
The index stands at 69.6, down from 71.9 in July. With the latest drop, all indices and most components are at their lowest levels since the index was constituted in January 2008.
The fall in consumer confidence in August can be attributed primarily to pessimism surrounding the Indian consumer’s outlook about urban employment, inflation and reluctance to spend on big-ticket purchases such as consumer durables, vehicles and flats.
Optimism about the nation’s economy, personal finances, expected job security, the ease of finding alternative employment and comfort in borrowing money weakened in the August survey.
The survey spotted two clear trends—higher savings and higher spending on necessities.
The employment confidence component of the index fell 4.4% to its lowest level of 45.8 in August.
The consumer spending component fell 10.5% to its lowest level of 54.7 even as 91% of the consumers surveyed reported an increase in expenditure on basic necessities.
The CNBC-TV18 Boston Analytics Consumer Confidence Index consists of two sub-indices—the current situations index and the future expectations index.
While the current situation index registered only a marginal decline of 0.8% from 74.2 in July to 73.6 in August, the future expectations index recorded a steep fall of almost 8% from 71.2 in July to 65.6.
The CNBC-TV18 Boston Analytics Consumer Confidence Index is computed from individual responses to 25 questions covering variables known to affect consumer confidence. The variables include employment, inflation, interest rates, real estate, household income, spending and savings.
cnbctv18@livemint.com
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First Published: Thu, Aug 27 2009. 09 50 PM IST