War and terrorism fears spike in North America & Europe; economic concerns decline around the world
Global consumer confidence edged up one index point in the third quarter to a score of 98—an increase of one point from the previous quarter and two points from the start of the year. The index, which has been on a slow and steady rise for two-and-a-half-years (since Q1 2012), has now exceeded a pre-recession level of 94 for three consecutive quarters.
In the latest online survey, conducted Aug. 13–Sept. 5, 2014, consumer confidence increased in sixty-five percent (65%) of the markets measured by Nielsen, compared to fifty-two percent (52%) in the second quarter. Among the world's biggest economies, consumer confidence increased four points in the U.S. (108), one point in Germany (97), three points in the U.K. (93) and four points in Japan (77), from the second quarter. Meanwhile, consumer confidence in China held steady at 111 for the fourth consecutive quarter.
India's score of 126 was the highest index of 60 markets, nevertheless, a decline of two points compared to the second quarter. Italy reported the lowest score of 47, a quarterly decline of four points. Australia (97) showed the biggest improvement, as confidence there returned to year-ago performance. Chile (85) logged the biggest decline, falling seven points compared to the previous quarter.
Consumer confidence in the North America region improved most, rising four points to 107—a score that matches Asia-Pacific's index for the first time in Nielsen's Consumer Confidence history (since 2005). Asia-Pacific's index increased one point. Confidence also increased three points in the Middle East/Africa (96), one point in Latin America (91) and one point in Europe (78), from the previous quarter.
"Outside of North America, a range of region- and country-specific factors are translating into weaker and more uneven improvements in consumer confidence," said Dr. Louise Keely, senior vice president, Nielsen. "Europe is being directly affected by the geopolitical crisis in Ukraine, and is also at a critical policy juncture concerning steps to prevent deflation and improve growth. Among major emerging economies, while India is displaying renewed potential for accelerating growth from its new government, China is moving in a different direction as it re-orients its economy toward greater domestic consumption."
The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures perceptions of local job prospects, personal finances and immediate spending intentions among more than 30,000 respondents with Internet access1 in 60 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively. The latest results reflect an outlook of cautious optimism, as every region's consumer confidence score improved compared to the previous quarter.
JOB PROSPECTS IMPROVE FASTER THAN PERSONAL FINANCES
Just over half of global respondents (52%) believed the job market would be good or excellent in the next 12 months, a 2 percentage-point increase from the second quarter. This modest increase follows steady but small upticks reported during the past five years since 2009 when employment sentiment dropped to an average annual low of 31% during that year.
While perceptions of personal finances have become more positive since 2009, consumers' overall sentiment about personal finances has not improved as significantly as their sentiment about their employment opportunities. Fifty-seven percent of global respondents rated their personal finances as good or excellent for the upcoming year, compared to the average annual low reported in 2009 of 46%—an 11 percentage-point increase. By contrast, the sentiment for job prospects increased 21 percentage points over the same time period.
North American respondents showed the most dramatic increase in job prospect expectations, as perceptions about employment opportunities rose to 55% in the third quarter—a 9 percentage-point improvement in 12 months (from 46% in Q3 2013). Positive perceptions for local job prospects increased in several other regions in the past 12 months as well: 7 percentage points in Asia-Pacific to 66%, 6 percentage points in the Middle East/Africa to 46% and 5 percentage points in Europe to 31%. Conversely, Latin America was the only region with a decline in job sentiment, dropping 8 percentage points since third quarter 2013 to 34%.
"A longer-term trend has been the divergence between the economic fortunes of the middle class in developed markets compared to those in emerging markets," said Dr. Keely. "In the U.S. and Western Europe, the middle has been structurally weakened while the low-wage sector has grown. There is also a growing divide between younger and older people, especially within Europe, with the former experiencing high rates of unemployment and underemployment. By contrast, the middle class grew strongly in emerging markets during the previous decade, and while recently that trend has slowed, it can still be expected to continue. Going forward, these disparities within and across countries can be expected to have a large impact on the overall level and patterns in discretionary spending."
DISCRETIONARY SPENDING INTENTIONS REMAIN STABLE FOR MOST
Considering that more than half of global respondents (54%) believed their country was in recession in the third quarter, it follows that many still maintain cautious-about-spending mindsets.
As such, global discretionary spending/saving intentions in the third quarter were flat across most categories, with marginal 1 percentage-point gains for saving spare cash (49%), for saving for retirement (12%) and for spending on holidays/vacations (36%). About one-third plan to spend on new clothes (34%) and out-of-home entertainment (31%)—both represent no change from the previous quarter. One-fourth intends to spend on new technology (a decline of 2 percentage points) and pay off debts/credit cards/loans (flat from Q2). About one-fifth expect to spend on home improvements (22%) and invest in stock/mutual funds (20%), a decline of 1 percentage point each from the second quarter.
CONCERNS ABOUT THE ECONOMY AND JOB SECURITY DECLINE, AS OTHER CONCERNS INCREASE
The economy and job security remain top concerns for respondents around the world, but sentiment on these points is weakening as worries about other concerns increase.
In North America, 27% of respondents said the economy was their biggest or second biggest concern for the next six months—down from 34% in the previous quarter. Conversely, fears about terrorism spiked 8 percentage points to 14%, concerns about war rose 5 percentage points to 9% and worries about work/life balance increased 3 percentage points to 12%.
In Asia-Pacific, concerns about health replaced the economy as the biggest or second biggest concern, climbing 6 percentage points to 30% in the third quarter. Worries about the economy declined 3 percentage points to 27%.
In Europe, 21% of respondents said job security was their biggest or second biggest concern for the next six months, a decline of 3 percentage points from the previous quarter. Worries about the economy also waned, dropping 1 percentage point to 20% in the third quarter. Conversely, worries about war increased 8 percentage points to 18%, and fears about terrorism rose 4 percentage points to 9% from the second quarter.
In the Latin America and Middle East/Africa regions, job security was the biggest or second biggest concern for 25% and 29% of respondents, respectively, a decline of 1 and 2 percentage points each, from the second quarter. Worries about the economy, however, bucked the downward trend reported in the other regions and increased 2 percentage points in both Latin America (to 26%) and the Middle East/Africa (to 22%).
REGIONAL HIGHLIGHTS:
NORTH AMERICAN CONSUMER CONFIDENCE RISES AGAIN
U.S. consumer confidence increased four index points for the second consecutive quarter to a score of 108 in the third quarter. The rise continued an upward trend that started in first-quarter 2013, and confidence in the U.S. has registered a 15-point increase since then. Confidence also increased in Canada, rising one point to 103 in the third quarter.
PROGRESS IN EUROPE REMAINS SLOW
Consumer confidence in Europe increased in 59% of markets measured in the third quarter, compared to 72% that increased in the second quarter. Six of 32 markets reported no change. Confidence in Germany, the biggest economy in the region, increased one index point to a score of 97—a continuation of small upticks over the past several quarters to a near-baseline score, which stands in stark contrast to the average index score in the region of 76.
CONFIDENCE IN ASIA-PACIFIC IS ABOVE 100 IN 9 OF 14 COUNTRIES
Consumer confidence in Asia-Pacific increased in 71% of the markets measured, as 10 of 14 countries posted increases, three declined and one was flat, compared to the second quarter. Nine of 14 countries in the region reported index scores above the baseline of 100. Australia (97) returned to consumer confidence levels posted in 2013 with an increase of one point from the same period last year (Q3 2013). South Korea had the lowest score in the region at 52, representing a one-point decline from the second quarter.
CONFIDENCE IN LATIN AMERICA EDGES UP ONE POINT
Confidence in the Latin America region increased one index point to a score of 91 in the third quarter, as index scores increased in three of the seven countries measured. Confidence in Brazil increased one point to 101—the highest score in the region. Mexico (88) and Colombia (98) increased three points each from the second quarter. Conversely, consumer confidence declined in Chile (85), down seven points; Venezuela (72), down two points; and Peru (97), down one point in the third quarter.
CONSUMER CONFIDENCE INCREASES IN THE MIDDLE EAST/AFRICA REGION
Consumer confidence increased in all five countries measured in the Middle East/Africa region in the third quarter. At 112, the United Arab Emirates had the highest score in the region, an increase of three points from the second quarter. Confidence increased three points in Saudi Arabia to 105, four points in Pakistan to 103, four points in Egypt to 85 and one point in South Africa to 86.
CONFIDENCE RISES IN SUB-SAHARAN AFRICA
Consumer confidence increased two index points in Nigeria in the third quarter to a score of 123—the highest score of the three countries measured in Nielsen's mobile survey for Sub-Saharan Africa. Confidence declined six points each in Kenya (105) and Ghana (97) from the second quarter.
