Sberbank’s Ivanov Consumer Confidence Tracker is still negative but confidence has been rising slowly all year.

The index, named after Russia’s most common surname, tracks the buying and saving habits of middle class Russians and is designed to give investors a handle on the mood in the country. The 21^st edition of the poll found consumer confidence retreated to -15% in the second quarter of 2017 but improved to -12% in the third quarter of 2017, demonstrating a positive trend since the index was launched at the end of 2015.

A q/q improvement was seen across all of the index’s individual components, but most notably in the perception of big ticket purchase conditions.

Sberbank think the brighter sentiment is “a reflection of positive real income growth set to come into view in the third quarter of 2017 on the back of record low inflation (3.4% on average in the third quarter of 2017 versus 4.2% in the second quarter of 2017 and 7.0% a year ago). As a result, personal wealth perception over the last 12 months improved to -16% in the third quarter of 2017, the best showing since end 2014.”

Despite a mild decline in the net hiring index, the unemployment rate among respondents decreased from 10.9% in the second quarter of 2017 to 10.6% in the third quarter of 2017, the lowest level since the third quarter of 2015.

Underemployment (the share of those employed part time but willing to work full time) was 8.9% versus 9.2% in the second quarter of 2017 and 8.2% a year ago.

The share of respondents mentioning that their companies were hiring new people decreased slightly q/q but remained high at 9.1% in the third quarter of 2017, versus 9.2% in the second quarter of 2017 and 7.5% a year before.

The share of those who reported layoffs at their company or workforce attrition edged up q/q – 42.0% in the third quarter of 2017 versus 40.7% in the second quarter of 2017 – but remained well down y/y at 47.4% in the third quarter of 2016.

The net hiring index came in at -33.0% in the third quarter of 2017, versus -31.5% in the second quarter of 2017 and -40.0% in the third quarter of 2016.

The best news is the clear trend of increasing incomes. The survey showed that wages rose by 5.5% y/y in the third quarter of 2017, slightly below the 6.1% growth that the State Statistic Service recorded.

“But the official wage statistics do not include information from small companies and those that pay their employees under the table: 29% of Ivanovs got a raise or wage indexation of 6.2% YTD, suggesting 1.8% average increase for the whole sample. If wages are increased, only 20% of this will be allocated toward food, compared with the 38% of income currently spent on food, 13% will be directed toward clothing and household goods (currently 17%) and 12% will be saved (compared with just 7% currently),” Sberbank said.

Another bit of good news is the pressure on house budgets is also decreasing. The percentage of Ivanovs trying to save on staples decreased q/q from 71% to 68% in the third quarter of 2017 and was flat y/y, reflecting the decreasing popularity of spending less on food.

Other money saving dodges also saw decreases: shopping in cheaper stores with lower prices (down 4 pp q/q to 64%), use of promo offers more often (down 2 pp q/q to 60%), and buying less expensive food (down 2 pp q/q to 60%).

“The share of customers coming to the store solely to buy promo items decreased from 48% in the second quarter of 2017 to 45% in the third quarter of 2017. Interestingly, that 20% told us that they always buy not the food products they plan to cook, but the ones which are on promotion. Nevertheless, the share of price-sensitive respondents was flat at 75% last quarter,” says Sberbank.

In terms of the population’s concerns, the overall picture did not change much last quarter. Corruption remained the major concern (59%, flat q/q). Unemployment was the second biggest worry; it was cited as a serious concern by 53% of respondents (down from 55% in the second quarter of 2017). Inflation was cited by 49% of respondents and remained in third place. Only 18% of respondents were troubled by the ruble exchange rate, up 1 pp from the previous survey.

“Despite Ivanovs’ overall continued caution with regard to food spending, we see strong positive developments. In net terms, the share of customers trying to save on non-food items decreased across all categories. Moreover, the index dropped to a record low across such categories as eating out, entertainment, vacations and utilities,” says Sberbank.

This is another confirmation that Ivanovs could finally afford to travel abroad in the third quarter of 2017  and outbound tourist numbers have already almost passed their pre-crisis peak this year.

“In this survey we gauged the Ivanovs’ attachment to particular brands and discovered that it is low. Only 16% search for particular brands when shopping. Some 40% always buy the cheapest items, while 45% look for brands depending on the category. This contradicts the industry dogma about the importance of brand-building, but we believe that the situation should start to change as nominal incomes recover. Naturally, brand importance is the lowest in bread (21%), and highest in alcohol (52%) and baby-food (61%),” Sberbank found.